##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-KSB


(Mark One)

|  |  |                                                                                                                                              
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|x |  | Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 2003.           
|  |  |                                                                                                                                              
|o |  | Transition report under section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ___________ to ___________.

Commission file number 0-18808

Great Western Land and Recreation, Inc.

(Name of small business issuer as specified in its charter)


|                                                                                            |  |                                             
|------------------------------------------------------------------------------------------- |  | --------------------------------------------
|Nevada
(State or other jurisdiction
of incorporation or organization)                       |  | 13-3530765
(IRS Employer Identification No.)
|                                                                                            |  |                                             
|5115 N. Scottsdale Road, Suite 101, Scottsdale, AZ
(Address of principal executive offices) |  | 85250
(Zip Code)                            

Registrants telephone number: (480) 949-6007

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:

Common Stock, Par Value $0.001
(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes x No o

Indicate by check mark if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. o

The registrants revenues for the fiscal year ended September 30, 2003, were
$2,263,056.

There is currently no active trading market for the Registrants common stock.
There have been no trades of the Registrants common stock within the last 60
days. The aggregate value of the voting stock held by non-affiliates of the
registrant as of November 30, 2003 based on the par value of $0.001 per share
was $1,358.

The number of shares of the Registrants Common Stock outstanding at December
1, 2003 was 20,781,965.

DOCUMENTS INCORPORATED BY REFERENCE
None.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: Yes o Nox

1



---

TABLE OF CONTENTS



|                          |                                                                                                                         |  |  |  |  |  |  | 
|------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                   
|                          | Item 1. Business                                                                                                       
|                          | Item 2. Description of Property                                                                                        
|                          | Item 3. Legal Proceedings                                                                                              
|                          | Item 4. Submission of Matters to a Vote of Security Holders                                                            
|PART II                  
|                          | Item 5. Market for Common Equity and Related Stockholder Matters                                                       
|                          | Item 6. Managements Discussion and Analysis                                                                           
|                          | Item 7. Financial Statements                                                                                           
|                          | Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                           
|PART III                 
|                          | Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
|                          | Item 10. Compensation of Directors and Executive Officers                                                              
|                          | Item 11. Security Ownership of Certain Beneficial Owners and Management                                                
|                          | Item 12. Certain Relationships and Related Transactions                                                                
|                          | Item 13. Exhibits and Reports on Form 8-K.                                                                             
|                          | Item 14. Controls and Procedures                                                                                       
|SIGNATURES               
|CONTENTS                 
|                          | REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                                     
|                          | CONSOLIDATED BALANCE SHEET                                                                                             
|                          | CONSOLIDATED STATEMENTS OF EARNINGS                                                                                    
|                          | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME                                               
|                          | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                  
|                          | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                             
|2003 10-KSB EXHIBIT INDEX
|EX-10.4                  
|Ex-10.5                  
|Ex-10.7                  
|Ex-10.10                 
|Ex-10.11                 
|Ex-10.12                 
|Ex-10.15                 
|Ex-10.16                 
|Ex-10.17                 
|Ex-10.19                 
|Ex-11                    
|Ex-21                    
|Ex-31.1                  
|Ex-31.2                  
|EX-32.1                  
|Ex-32.2                  
|Ex-99.1                  



---



##### Table of Contents






PART I




Item 1. Business

Overview

Great
Western Land and Recreation, Inc. (formerly 1st Realty Investments,
Inc.) (we or the Company) is incorporated in the state of Nevada. On July
23, 2002, we entered into an Agreement and Plan of Merger (the Merger
Agreement or the Agreement) with Great Western Land and Recreation, Inc. a
Delaware corporation (Great Western Delaware). Under the Merger Agreement, we
agreed to undertake a series of transactions the result of which was the
transfer of control of the Company to Amortibanc Investments, LC
(Amortibanc), the stockholder of Great Western Delaware, and the merger of
Great Western Delaware into the Company. We were the surviving entity.
Immediately following the merger, former 1st Realty stockholders owned
approximately 9% of the Company and Amortibanc owned approximately 91% of the
Company (94% assuming the conversion of the preferred stock into common stock).

We have accounted for our acquisition of Great Western Delaware as a
reverse acquisition, with Great Western Delaware the acquirer and 1st Realty
the acquiree for reporting purposes. Prior to September 2000, we were a
dormant non-operating company. Our current operations are solely the result of
the series of transactions we entered into with Great Western Delaware. As a
result, the assets and liabilities of both companies have been combined at
their historical cost. The accompanying discussion and analysis is presented
as if the Merger was consummated on January 1, 2002.

We acquire, develop, market, sell and finance residential and recreational
property in the southwestern United States, with over 48,000 acres in various
stages of development. Our properties are located in Arizona, Texas and New
Mexico and consist of a variety of lifestyle choices including townhomes and
condominiums for first-time homebuyers, vacant lots for commercial homebuilders
and ranch lots for those seeking recreational and investment properties. Over
the years, we have developed a number of subdivision projects in the Houston
area, with additional subdivision projects currently in various stages of
development. Subdivided residential lots are marketed principally to builders
seeking to build homes in quality residential settings in the low- to mid-price
range. Our ranch properties are marketed to purchasers seeking a long-term
investment in up-scale vacant ranch land. In addition, we engage in ranching
and agricultural activities on some of our properties until the properties are
either developed or sold. These activities include the planting of tree farms,
the ownership of a modest cattle herd on one of our ranches and the leasing of
another ranch property for cattle grazing. As an additional marketing incentive
to customers for our recreational land, we offer financing on individual
purchases of ranch lots. The majority of these loans are then sold to third
parties.

On June 4, 2003, we changed our year-end from December 31 to September 30.
As a result of this change, fiscal 2003 will be a short year, which will end
on September 30, 2003 and consist of only nine months.

Industry Overview

The real estate industry is fragmented and highly competitive. In each of
our markets, we compete with numerous builders, developers and others for the
acquisition of property and with local, regional and national developers,
homebuilders and others with respect to the sale of residential lots.
Competition also occurs with regard to obtaining, among other things, desirable
financing, raw materials and skilled labor. We believe we can effectively
compete in our market areas and have confidence in our ability to locate,
develop and sell attractive properties in the markets in which we wish to
operate.

Properties

The following description of our major properties includes
forward-looking statements. Forward-looking statements are often
characterized by the use of words such as may, believes, plans, will,
anticipates, estimates, expects, or intends or by discussions of
strategy, plans or intentions. All forward-looking statements in this Annual
Report to Stockholders are made based on our current expectations and
estimates, which involve risks, uncertainties and other factors that could
cause results to differ materially from those expressed in forward-looking
statements. You are cautioned not to place undue reliance on any such
forward-looking statements. We have no obligation to publicly release the
result of any revisions that may be made to any forward-looking statements to
reflect anticipated or unanticipated events or circumstances occurring after
the date of such statements. Forward-looking statements regarding our major
projects involve a number of risks and uncertainties including, but not limited
to, general economic conditions, our ability to incur additional debt to
finance development activities, possible delays in planned development and
other risk factors as set forth in this report and in Exhibit 99.1 of this
Annual Report to Stockholders and in our other filings with the Securities and
Exchange Commission.

2



---



##### Table of Contents



Texas

Coventry Subdivision.Coventry consists of approximately 300 lots located
in northwest Houston. Two major homebuilders are actively building in this
development. Sales of these lots commenced in 1997 and there are currently
approximately 23 lots remaining, all of which are under contract. Coventry
consists of heavily wooded lots and is surrounded by forest. The development is
convenient to shopping, dining and golf. Substantially all of the development
costs for Coventry have already been incurred.

Warren Ranch Subdivision.Warren Ranch consists of approximately 480 acres
located in northwest Houston. It will be a residential lot and commercial
subdivision, developed in multiple phases over the next eleven years. We
expect construction on Phase I, which will consist of 200 lots, to begin in
early 2004. Development costs for Phase I are estimated at $2.9 million, which
will be financed primarily with a bank loan. The property is pledged as
collateral on a loan with a balance of $502,881 as of September 30, 2003.
Interest payments at 3.0% over prime (7.0% as of September 30, 2003) are due
quarterly, and the loan is due in April 2004. It is our intent to refinance
this loan with a development loan for the project. We have received a
commitment from a bank for the development loan, which is expected to close in
January 2004.

Woodland Court.Woodland Court is a planned 43-unit townhome project
located in College Station, Texas. The land for this project is currently
under contract, with the purchase expected to close in late January 2004.
Construction on this project is expected to begin in Spring 2004. Development
costs are estimated at $5.2 million, which will be financed primarily with a
bank loan, with sales to occur over the next two years.

Wheatstone Subdivision.Wheatstone consists of approximately 45 acres
located near the West Houston Energy corridor. The property is convenient to
shopping, including grocery shopping, and entertainment. The property is
surrounded by an established upscale residential neighborhood adjoining the
West Houston YMCA. The last of the 180 lots in this subdivision were sold in
September 2003.

Wheatstone III  Brookside Court Subdivision. Wheatstone III is a 30-acre
gated community in northwest Houston designed for garden style homes. The
development is convenient to shopping, including grocery shopping, and
entertainment. Phase I consisted of 76 lots that were completed in 1998. This
development was completed with the sale of the last of the nine lots in Phase
II in April 2003.

Arizona

Glendale Springs Condominiums.Glendale Springs Condominiums is a planned
80-unit condominium project located in Glendale, Arizona. Construction on
Phase I, which will consist of 48 units, began in the spring of 2003.
Development costs for Phase I are estimated at $5.4 million, which is being
primarily financed with a bank loan. At September 30, 2003, the bank loan had
a balance of $612,250. Interest payments at 1.5% to 2.0% over prime (7.0% at
September 30, 2003) are due monthly, with principal reductions made as
condominiums are sold. We expect with sales to occur over the next two years.

Wagon Bow Ranch.Wagon Bow Ranch is a commercial cattle ranch located in
Mohave County in the Aquarius Mountains in northwest Arizona, consisting of
approximately 48,000 acres, 34,000 of which are deeded land and 14,000 are
state-leased land. The ranch is accessible by highway and country road that are
maintained year round. The property is made of diverse topography, ranging from
mountainous slopes in the west to sloping mesas and flats in the majority of
the Ranch. The Ranch supports over 600 animal units year long with ample water
in running streams and springs that run year round. There is abundant wildlife
including mule deer, antelope, bear, mountain lion and javelina. By car the
Ranch is approximately two and a half-hours from Las Vegas, three hours from
Phoenix, and four hours from Los Angeles. The property has a main residence,
foremans house, guesthouse, bunkhouse, owners house, outbuildings and
corrals. We have sold approximately 23,000 acres and are marketing for sale the
balance in 40 and 160-acre ranch parcels. No significant development costs are
planned. The property is pledged as collateral on a loan with a balance of
$782,893 as of September 30, 2003. Interest payments at 4.0% over LIBOR (6.5%
as of September 30, 2003) are due quarterly, with principal reductions made as
lots are sold. Any remaining balance on the loan is due in January 2007.

Wright Place.Wright Place is a planned 14-unit townhome project designed
as an infill project in Phoenix, Arizona. We have obtained the zoning permits
and entitlements for the project and expect to begin construction in the spring
of 2004. Development costs are estimated at $1.7 million, which will be
financed primarily with a bank loan. We expect sales to occur over the next
two years.

3



---



##### Table of Contents



New Mexico

Willow Springs Ranch.Willow Springs Ranch is a commercial cattle ranch
located on the west side of Interstate 25, approximately 25 miles south of
Socorro. The ranch consists of the northwest portion of the Pedro Armendaris
Land Grant No. 34 deeded by the King of Spain in 1819. The remainder of the
grant is owned by Ted Turner. The property is approximately 50,000 acres of
deeded land with elevations ranging from 4,700 feet in the south to 6,400 feet
in the north. The Ranch supports over 600 animal units year long with annual
rainfall from 12 to 14 inches in the higher elevations to eight inches in the
lower elevations. Large herds of pronghorn antelope and trophy mule deer, as
well as a large quail population, reside on the land. The property has
approximately 118 miles of pipeline, 68 drinking troughs, storage tanks, seven
dirt tanks, pipe corrals and loading chute, main shipping pens with scales, 88
miles of fencing and six holding traps. We have sold approximately 11,000 acres
since June 2000 in parcels of 40 acres or more. We anticipate that the
remainder of this property will be sold in parcels ranging from 15 to 640
acres. No significant development costs are planned. The property is pledged
as collateral on four loans with combined balances of $2,092,971 as of
September 30, 2003. Interest on these loans is at rates ranging from 5.23% to
11.0% as of September 30, 2003. Principal and interest payments are due either
monthly or quarterly. Two of the loans, with combined balances of $1,825,120
as of September 30, 2003, mature in June 2004. The other two loans mature in
April 2006 and September 2017.

Regulation

The real estate industry is subject to extensive complex regulation. We
must comply with various federal, state and local environmental, zoning and
other statutes and regulations regarding the purchase, subdivision and sale of
real estate and various aspects of our financing operations. In addition, our
customer financing activities are subject to extensive regulation, which may
include regulation under the Truth-in-Lending Act and Regulation Z, the Fair
Housing Act, the Fair Debt Collection Practices Act, the Equal Credit
Opportunity Act and Regulation B, the Electronic Funds Transfer Act and
Regulation E, the Home Mortgage Disclosure Act and Regulation C, Unfair or
Deceptive Acts or Practices and Regulation AA and the Right to Financial
Privacy Act.

We believe that we are in compliance in all material respects with
applicable regulations. However, these regulations are subject to change and we
cannot assess the cost of complying with all of the applicable laws and
regulations. Our failure to comply with applicable laws or regulations could
subject us to large fines or other costly activities to come into compliance.

Land owners are subject to liability for the costs of removal and
remediation of certain hazardous or toxic substances on their property, as well
as for the related costs of investigation and property damage under various
federal, state and local laws, ordinances and regulations. These laws often
impose liability without regard to whether the owner knew or was responsible
for the presence of the hazardous or toxic substances. If there are hazardous
or toxic substances on our properties that we are not aware of and we are
unable to remediate the property, or the cost of remediation is too high, we
may not be able to sell or lease our property or to borrow against and use the
property as collateral. In addition to remediation of land, other federal and
state laws require the removal or encapsulation of asbestos-containing material
when the material is in poor condition or in the event of construction,
demolition, remodeling or renovation. Other statutes may require the removal of
underground storage tanks. If we fail to comply with these and other
environmental, health or safety requirements we may be required to cease or
change our operations at a property.

Competition

The real estate industry is fragmented and highly competitive. We compete
against numerous builders, developers and others in the real estate business in
each of our markets. We compete mainly with builders and developers for the
acquisition of property and with local, regional and national developers and
homebuilders in the sale of townhomes, condominiums and residential lots. For
ranch land sales, we compete mainly with regional recreational land developers.
We believe that we are competitive in our markets based on our strong
reputation and the price, location and quality of our products, as well as on
the basis of our experience in land acquisition, development, marketing and
sale.

In our customer financing activities, we compete with banks, mortgage
companies, other financial institutions and government agencies offering
financing of real estate. However, we offer customer financing as a marketing
incentive to facilitate our recreational land sales and, therefore, do not view
our activities as being in competition with other lenders.

Notes Receivable

At September 30, 2003, we held $70,118 of third party notes receivable
from the sale of property. These notes are generally secured by the property
sold and bear interest at 9.5% per year.

4



---



##### Table of Contents



Debt

Notes Payable.At September 30, 2003, notes payable total $4.0 million,
consisting primarily of senior indebtedness to institutions bearing interest at
variable rates from 1.5% to 4% over either the prime rate or a similar base
rate such as the annualized average weekly yield of U.S. Treasury securities,
maturing on various dates through September 2017. The institutional indebtedness
is secured by Deeds of Trust on the properties associated with the borrowings.

Subordinated Debt.At September 30, 2003, subordinated debt totals $3.3
million, payable to Amortibanc, bearing interest at rates between 8% and 10%.
Payments on the debt are made only when cash flow from a land sale, after
payment of bank debt, exceeds our operating cash requirements. This
determination is made by our management. This indebtedness is subordinated to
all of our institutional indebtedness. On September 29, 2003, $293,106 of this
subordinated debt was converted to equity.

Facilities

Our executive offices are located at 5115 N. Scottsdale Road, Suite 101,
Scottsdale, Arizona 85250. We also occupy sales offices in Wikieup, Arizona
and near Socorro, New Mexico as well as a small office in Houston, Texas. All
facilities are leased except for the sales office near Socorro, New Mexico,
which is located on the Willow Spring Ranch. We believe that our properties
and equipment are well maintained, in good operating condition and adequate for
our presently foreseeable needs.

Employees

As of September 30, 2003, we have 12 employees, five of whom are involved
in marketing activities and seven of whom serve in management and
administration roles. In addition, we use contract labor on an as-needed basis
for ranch maintenance.




Item 2. Description of Property

Our executive offices are located at 5115 N. Scottsdale Road, Suite 101,
Scottsdale, Arizona 85250. We also occupy sales offices in Wikieup, Arizona
and near Socorro, New Mexico as well as a small office in Houston, Texas. All
facilities are leased except for the sales office near Socorro, New Mexico,
which is located on the Willow Spring Ranch. We believe that our properties
and equipment are well maintained, in good operating condition and adequate for
our presently foreseeable needs.

It is our policy to acquire real estate or investments in real estate for
development and resale. We do not currently have any limitations on the
percentage of our assets which may be invested in any one investment or type of
investment, however we focus on acquiring, developing, marketing, selling and
financing residential and recreational property in the southwestern United
States. We finance these properties through a combination of borrowings from
banks and cash generated from land and lot sales. See Item 1 Business 
Properties for a description of each of our major properties and Item 1
Business  Competition for a discussion of the general competitive conditions
to which our properties are subject.

Notes receivable from sales of property are secured by the property sold.
Although we have retained certain notes receivable, these notes are generally
sold to a third party with recourse upon nonpayment by the debtor.

In the opinion of Management, all of our properties are adequately covered
by insurance.




Item 3. Legal Proceedings

We are not a party to any pending legal proceedings and, to the best of
our knowledge, no litigation by or against us has been threatened.




Item 4. Submission of Matters to a Vote of Security Holders

None.




PART II




Item 5. Market for Common Equity and Related Stockholder Matters

There is currently no active trading market for our common stock, and
there can be no assurance that an active or liquid trading market for our
common stock will develop in the future.

5



---



##### Table of Contents



According to our transfer agent, at September 30, 2003, there were 7,583
holders of record of our common stock, including broker-dealers and clearing
firms holding shares on behalf of their clients.

No dividends have ever been paid on our common stock, and we do not
anticipate paying dividends in the foreseeable future.




Item 6. Managements Discussion and Analysis

Forward-Looking Statements

This Annual Report to Stockholders includes forward-looking statements.
Forward-looking statements are often characterized by the use of words such as
may, believes, plans, will, anticipates, estimates, expects, or
intends or by discussions of strategy, plans or intentions. All
forward-looking statements in this Annual Report to Stockholders are made based
on our current expectations and estimates, which involve risks, uncertainties
and other factors that could cause results to differ materially from those
expressed in forward-looking statements. You are cautioned not to place undue
reliance on any such forward-looking statements. We have no obligation to
publicly release the result of any revisions that may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements. Forward-looking
statements involve a number of risks and uncertainties including, but not
limited to, general economic conditions, competitive factors and other risk
factors as set forth in this report and in Exhibit 99.1 of this Annual Report
to Stockholders and in our other filings with the Securities and Exchange
Commission.

Results of Operations

On June 4, 2003, we changed our year-end from December 31 to September 30.
As a result of this change, fiscal 2003 was a short year, which ended on
September 30, 2003 and consisted of only nine months. Accordingly, the
following discussion of results of operations will compare audited
balances for the nine months
ended September 30, 2003 to the unaudited balances for the nine months ended September 30, 2002, as
follows:

|                                                                 |                                            |   |                                 |            |      |   |           |            |  
|---------------------------------------------------------------- | ------------------------------------------ | - | ------------------------------- | ---------- | ---- | - | --------- | ---------- | -
|                                                                 |                                            |   | Nine months ended September 30,
|                                                                 |                                            |   |                                
|                                                                 |                                            |   | 2003                            |            | 2002
|                                                                 |                                            |   |                                 |            |     
|Land and lot sales                                               |                                            | $ | 2,263,056                       |            |      | $ | 2,818,373 |           
|Cost of land and lot sales                                       |                                            |   | 1,182,336                       |            |      |   | 1,203,876 |           
|                                                                 |                                            |   |                                 |            |      |   |           |           
|                                                                 | Gross profit on sales                      |   |                                 | 1,080,720  |      |   |           | 1,614,497  |  
|Operating, selling, general and
administrative expense           |                                            |   | 1,112,925                       |            |      |   | 1,871,816 |           
|                                                                 |                                            |   |                                 |            |      |   |           |           
|                                                                 |                                            |   | (32,205                         | )          |      |   | (257,319  | )         
|Other income (expense)                                           |                                            |   |                                 |            |      |   |           |           
|                                                                 | Interest expense                           |   |                                 | (382,953   | )    |   |           | (567,148   | )
|                                                                 | Interest income                            |   |                                 | 112,891    |      |   |           | 143,014    |  
|                                                                 | Equity in losses of unconsolidated company |   |                                 | (53,530    | )    |   |           |           |  
|                                                                 | Gain on settlement of note payable         |   |                                 | 260,000    |      |   |           |           |  
|                                                                 | Other income                               |   |                                 | 111,814    |      |   |           | 118,453    |  
|                                                                 |                                            |   |                                 |            |      |   |           |           
|                                                                 |                                            |   | 48,222                          |            |      |   | (305,681  | )         
|                                                                 |                                            |   |                                 |            |      |   |           |           
|Earnings (loss) before minority interest                         |                                            |   | 16,017                          |            |      |   | (563,000  | )         
|Minority interest                                                |                                            |   | (832                            | )          |      |   | (841      | )         
|                                                                 |                                            |   |                                 |            |      |   |           |           
|                                                                 | Net earnings (loss)                        |   | $                               | 15,185     |      |   | $         | (563,841   | )
|                                                                 |                                            |   |                                 |            |      |   |           |           
|Net earnings (loss) per common and common
equivalent share       |                                            |   |                                 |            |      |   |           |           
|                                                                 | Basic and diluted                          |   | $                               |           |      |   | $         | (0.03      | )
|                                                                 |                                            |   |                                 |            |      |   |           |           
|Weighted average common and common
equivalent shares outstanding |                                            |   |                                 |            |      |   |           |           
|                                                                 | Basic and diluted                          |   |                                 | 20,781,965 |      |   |           | 20,781,965 |  
|                                                                 |                                            |   |                                 |            |      |   |           |           

6



---



##### Table of Contents



Nine months ended September 30, 2003 (first nine months of 2003) compared to
the nine months ended September 30, 2002 (first nine months of 2002)

Land
and lot sales.Land and lot sales decreased $555,317 or 20% to
$2,263,056 in the first nine months of 2003 from $2,818,373 in the first nine
months of 2002. This decrease was the result of decreases in bulk land sales of
$169,346 and residential lot sales of $718,004 partially offset by an increase
in ranch land sales of $332,033. The bulk sale in the first nine months of
2002 included the sale of a parcel of land in Houston to another developer
who owned the adjacent property. There were no such bulk sales in the first
nine months of 2003. The decline in residential lot sales reflects the current
economic slowdown, and the fact that our current projects in Houston are
nearing completion. The Wheatstone and Wheatstone III subdivisions were
completed and sold out during 2003. We expect the Coventry subdivision to be
sold out by the end of fiscal 2004. However, we expect Warren Ranch, a new
residential development in the Houston metro area, to begin generating revenue
in the summer of 2004. The increase in ranch land sales is the result of our
focus on improving the quality of the sales force at our ranches. We believe
that these efforts, along with an improvement in the economy, will lead to
increased ranch land sales.

Our land and lot sales are affected by numerous factors including mortgage
interest rates, demand for new housing starts and the availability of finished
lots within a particular area. Generally, the pace of sales and the price per
lot increase over the life of a project as developments gain popularity and as
contract price escalators become effective.

Cost of land and lot sales.Cost of land and lot sales decreased $21,540,
or 2%, to $1,182,336 in the first nine months of 2003 from $1,203,876 in the
first nine months of 2002. As a percentage of land and lot sales, the cost of
land and lot sales increased to 52% in the first nine months of 2003
from 43%
in the first nine months of 2002. This was due to the bulk sale
discussed above and a decrease in the gross margins on residential lot sales in
Houston. The bulk sale land had been carried at zero value due to its location
in a flood way, which severely limited its ability to be developed. However,
changes in circumstances increased the development potential of the land when
combined with the adjacent property.

Operating, selling, general and administrative expenses.Operating,
selling, general and administrative expenses decreased $758,891, or 41%, to
$1,112,925 in the first nine months of 2003 from $1,871,816 in the first nine
months of 2002. The decrease was primarily due to decreases in professional
fees of $333,577, salaries of $179,604, advertising and promotion of $60,537,
taxes of $57,623, auto expense of $34,220, travel of $26,791, meals and
entertainment of $25,043 and maintenance and repairs of $20,918. Professional
fees in 2002 were unusually high due to activity related to Great Western
Delawares proposed merger with quepasa.com and to Great Western Delawares
merger with 1st Realty. Salaries were lower in 2003 due to lower staffing
levels. Advertising costs were higher in 2002 because during that period our
advertising program included television. Our current advertising program
focuses on print and other types of advertising. We believe this is a more
effective way to reach our target audience. Taxes decreased due to lower
property and franchise tax liabilities associated with our Houston projects.
The remaining reductions in expenses are due to cost cutting measures we
implemented during the year.

Interest expense.Interest expense decreased $184,195 or 32% to $382,953
in the first nine months of 2003 from $567,148 in the first nine months of
2002. The decrease is due to declining interest rates on the variable rate
loans associated with the residential lot sales business, and to lower average
outstanding balances on our loans due to the repayment of principal as lots are
sold.

Interest income.Interest income decreased $30,123 to $112,891 in the
first nine months of 2003 from $143,014 in the first nine months of 2002 due to
lower outstanding balances on notes receivable.

Equity in losses of unconsolidated company.Equity in losses of
unconsolidated company (Laguna) was $53,530 in the first nine months of 2003
compared to $0 in the first nine months of 2002. Due to losses experienced by
Laguna in prior years, our investment in Laguna had been written down to $0.
However, under the terms of the Laguna at Arrowhead Apartments L.L.C. operating
agreement, Laguna Investments L.L.C. is subject to additional capital calls in
connection with its ownership interest in Laguna at Arrowhead Apartments L.L.C.
An additional capital call, for $53,530, was paid during 2003. As a result of
this payment, unrecognized equity losses from prior periods were recorded to
the extent of the capital call.

Gain on settlement of note payable.Gain on settlement of note payable was
$260,000 in the first nine months of 2003 compared to $-0- in the first nine
months of 2002. Effective July 8, 2003, in exchange for a $650,000 note
payable, we acquired land in Stafford, Texas for $125,000 and also agreed to
acquire a 34% interest in #22 Stafford Springs LTD from the same third-party
for $525,000. In September 2003, the seller of the ownership interest needed
to generate cash to fund an unrelated development project, and agreed to accept
a discount in exchange for an early payoff of the $650,000 note. As a result
this note was paid off on September 29, 2003 at a discount of $260,000.



7



---



##### Table of Contents





Other income.Other income was $111,814 in the first nine months of 2003
compared to $118,453 in the first nine months of 2002. Other income in the
first nine months of 2003 included $50,192 in life insurance proceeds. Other
income in the first nine months of 2002 included $35,000 in grazing lease
income related to the Wagon Bow Ranch. In the fourth quarter of 2002, these
grazing rights were sold.

Net earnings (loss).Net earnings were $15,185 the first nine months of
2003 compared to a loss of $563,841 in the first nine months of 2002, an
improvement of $579,026. This improvement is primarily due to a $758,891
decrease in operating expenses, a $184,195 decrease in interest expense and a
$260,000 increase in gain on settlement of note payable, partially offset by a
$533,777 decrease in gross profit due to lower sales, and equity in losses of
unconsolidated company of $53,530.

Liquidity and Capital Resources

In this section of the management discussion and analysis segment, we are going to discuss:



| |  |  | sources and uses of cash, and significant factors that influence both;
| | - |  | ----------------------------------------------------------------------
|
| |  |  | our analysis of our cash flows for the nine months of fiscal 2003; and
|
| |  |  | our commitments and contractual obligations.                          

All of these factors are important to obtain an understanding of our
ability to meet our current obligations, to fund working capital, to finance
the acquisition and development of new projects, and to pay down existing debt.

Sources and uses of cash. We require cash to fund our operating expenses,
to finance the acquisition and development of new projects and to pay debt
service. Our principal sources of liquidity are cash on hand, cash generated
from land and lot sales, cash generated from bulk land sales, collections on
notes receivable, refinancings and funds from external borrowings. We may also
raise additional funding through future equity offerings, subject to market
conditions.

We believe that the key factors that could affect sources of cash include:



| |  |  | factors that affect our results of operations and cash flows,
including reduced demand for land resulting from the recent economic
slowdown, competitive pricing pressures; and          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | factors that affect our access to bank financing that could impair
our ability to obtain needed financing on acceptable terms to finance
the acquisition and development of new projects.

Analysis of cash flows.As stated above, on June 4, 2003, we changed our
year end from December 31 to September 30. As a result of this change, fiscal
2003 was a short year, which ended on September 30, 2003 and consisted of only
nine months. Accordingly, the following analysis of cash flows will cover the
nine months ended September 30, 2003 compared to the nine months ended
September 30, 2002, as follows:

|                                     |                                                                                                      |                                                     |   |                                 |         |      |   |           |          |  
|------------------------------------ | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------- | - | ------------------------------- | ------- | ---- | - | --------- | -------- | -
|                                     |                                                                                                      |                                                     |   | Nine months ended September 30,
|                                     |                                                                                                      |                                                     |   |                                
|                                     |                                                                                                      |                                                     |   | 2003                            |         | 2002
|                                     |                                                                                                      |                                                     |   |                                 |         |     
|Cash flows from operating activities |                                                                                                      |                                                     |   |                                 |         |      |   |          
|                                     | Net earnings (loss)                                                                                  |                                                     | $ | 15,185                          |         |      | $ | (563,841  | )       
|                                     | Adjustments to reconcile net earnings (loss) to net cash provided
by (used in ) operating activities |                                                     |   | 1,646,396                       |         |      |   | 1,124,417 |         
|                                     | Change in assets and liabilities                                                                     |                                                     |   | (1,252,001                      | )       |      |   | (688,183  | )       
|                                     |                                                                                                      |                                                     |   |                                 |         |      |   |          
|                                     |                                                                                                      | Net cash provided by (used in) operating activities |   |                                 | 409,580 |      |   |           | (127,607 | )
|Cash flows from investing activities |                                                                                                      |                                                     |   |                                 |         |      |   |          
|                                     | Increase (decrease) in advances to/from related parties                                              |                                                     |   | 46,628                          |         |      |   | (139,073  | )       
|                                     | Investment in unconsolidated company                                                                 |                                                     |   | (53,530                         | )       |      |   |          |         
|                                     | Proceeds from sale of property and equipment                                                         |                                                     |   | 11,577                          |         |      |   |          |         
|                                     | Purchase of property and equipment                                                                   |                                                     |   | (47,215                         | )       |      |   | (45,366   | )       
|                                     |                                                                                                      |                                                     |   |                                 |         |      |   |          
|                                     |                                                                                                      | Net cash used in investing activities               |   |                                 | (42,540 | )    |   |           | (184,439 | )

8



---



##### Table of Contents



|                                                 |                                                |                                           |           |                                 |        |      |         |            |         | 
|------------------------------------------------ | ---------------------------------------------- | ----------------------------------------- | --------- | ------------------------------- | ------ | ---- | ------- | ---------- | ------- | 
|                                                 |                                                |                                           |           | Nine months ended September 30,
|                                                 |                                                |                                           |           |                                
|                                                 |                                                |                                           |           | 2003                            |        | 2002
|                                                 |                                                |                                           |           |                                 |        |     
|Cash flows from financing activities             |                                                |                                           |           |                                 |        |      |         |           
|                                                 | Issuance of notes payable                      |                                           |           | 1,368,549                       |        |      |         | 3,697,665  |        
|                                                 | Payments on notes payable                      |                                           |           | (1,289,114                      | )      |      |         | (2,816,023 | )      
|                                                 | Decrease in subordinated debt                  |                                           |           |                                |        |      |         | (431,747   | )      
|                                                 | Minority investment in consolidated subsidiary |                                           |           |                                |        |      |         | 45,000     |        
|                                                 |                                                |                                           |           |                                 |        |      |         |           
|                                                 |                                                | Net cash provided by financing activities |           |                                 | 79,435 |      |         |            | 494,895 | 
|                                                 |                                                |                                           |           |                                 |        |      |         |           
|                                                 | Net increase in cash and cash equivalents      |                                           |           | 446,475                         |        |      |         | 182,849    |        
|Cash and cash equivalents at beginning of period |                                                |                                           | 654,369   |                                 |        |      | 317,969 |           
|                                                 |                                                |                                           |           |                                 |        |      |         |           
|Cash and cash equivalents at end of period       |                                                | $                                         | 1,100,844 |                                 |        | $    | 500,818 |           
|                                                 |                                                |                                           |           |                                 |        |      |         |           

Cash flow activity for the nine months ended September 30, 2003.As of
September 30, 2003, we had cash and cash equivalents of $1,100,844, an increase
of $654,369 from the December 31, 2002 balance. This compares to an increase
in cash and cash equivalents of $182,849 in the first nine months of 2002.

Cash flow provided by operating activities was $409,580 for the first nine
months of 2003 compared to cash used in operating activities of $127,607 in the
first nine months of 2002, an increase of $537,187. Factors contributing to
our increased cash flows from operating activities in the first nine months of
2003 as compared to the first nine months of 2002 include:



| |  |  | A decrease in cash used for operating, selling, general and
administrative expense to $1,088,106 in the first nine months of 2003
compared to $1,856,446 in the first nine months of 2002;                                                                             
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Collections of notes receivable of $1,560,935 in the first nine
months of 2003 compared to $894,777 in the first nine months of 2002.
Collections of notes receivable was unusually large in 2003, due to the
payoff of notes related to bulk sales of land in Houston;
|
| |  |  | Accounts payable and other accrued liabilities increased $296,288
during the first nine months of 2003, compared to a decrease of $139,080
in the nine six months of 2002; and                                                                                         
|
| |  |  | The change in deferred income was $0 during the first nine months of
2003 compared to a decrease of $235,455 in the first nine months of
2002.                                                                                                                         

These were partially offset by the following factors causing decreased
cash flows:



| |  |  | A decrease in land and lot sales to $2,263,056 in the first nine
months of 2003 from $2,700,373 in the first nine months of 2002;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Land held for development and sale increased $808,273 in the first
nine months of 2003 compared to an increase of $422,938 in the first
nine months of 2002. The increase in 2003 is primarily due to the
capitalization of development costs related to our condominium project
in Glendale, Arizona and the purchase of land in Stafford, Texas for
$125,000. Construction costs for the Glendale project are being funded
primarily through a bank loan; and                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Other assets increased $740,016 in the first nine months of 2003
compared to a decrease of $109,290 in the first nine months of 2002.
The increase in other assets in the first nine months of 2003 was
primarily due to an agreement we entered into effective July 8, 2003, to
acquire a 34% interest in #22 Stafford Springs LTD (Stafford Springs)
for $525,000. Stafford Springs owns the Summer Park Duplexes, a
168-unit, HUD-financed, manufactured housing duplex rental community in
Stafford, Texas. The $525,000 paid for Stafford Springs is a deposit
pending receipt of final approval of this transaction by HUD. As of
September 30, 2003, HUD approval had not yet been received. The
$525,000 deposit was in the form of a note payable, which was paid off
on September 29, 2003.

Looking forward, we expect cash flow from operations to remain slow in the
first half of fiscal of 2004, improving in the last half of the year as new
projects begin to come on-line.

Net cash used in investing activities was $42,540 in the first nine months
of 2003 compared to $184,439 in the first nine months of 2002. Net advances
from related entities (primarily accrued interest owed to the minority
investors in our Glendale condominium project) increased $46,628 in the first
nine months of 2003 compared to a decrease of $139,073 in the first nine months
of 2002. We also paid $53,530 as an additional capital call in connection with
our ownership interest in Laguna at Arrowhead Apartments L.L.C. This was the
first capital call since we made an investment in Laguna in 1997, and we do not
anticipate any additional capital calls over the next twelve months. We
purchased $47,215 of property and equipment in the first nine months of 2003
compared to $45,366 in the first nine months of 2002. Proceeds from the sale
of property and equipment totaled $11,577 in the first nine months of 2003
compared to $-0- in the first nine months of 2002. We are not planning for any
significant increases in our purchases of property and equipment in fiscal
2004.

9



---



##### Table of Contents



Net cash provided by financing activities was $79,435 in the first nine
months of 2003 compared to $494,895 in the first nine months of 2002. During
the first nine months of 2003, additional borrowings totaled $1,368,549
compared to $3,697,665 in the first nine months of 2002. The borrowings in
2003 consisted primarily of the $650,000 note payable issued in exchange for
land in Stafford, Texas and for our ownership interest in land in Stafford
Springs discussed above, and draws on a construction loan for the development
of our condominium project in Glendale, Arizona. Construction on Phase I of
the Glendale project is expected to continue through the summer of 2004, with
sales beginning in January 2004. Payments on notes payable totaled $1,289,114
in the first nine months of 2003 compared to $2,816,023 in the first nine
months of 2002. Principal payments on our notes are made primarily through the
payment of release prices as lots are sold. Cash provided by financing
activities in the first nine months of 2002 also included $45,000 we received
from minority investors in our Warren Ranch subdivision project, and a $431,747
decrease in subordinated debt.

Contractual obligations. Our long-term debt includes notes payable of
$4,026,588 and subordinated debt of $3,319,684. Other than two vehicle loans,
all of the notes payable were incurred to finance the development of our real
estate projects. Principal payments on those notes payable are primarily made
as lots are sold, although minimum principal payments are also required on
certain loans. Included in notes payable is a $502,881 loan used to purchase
480 acres of land in the Houston metro area for a new subdivision. This loan
is due in April 2004. It is our intent to refinance this loan with a
development loan for the project. We have received a commitment from a bank
for the development loan, which is expected to close in January 2004. In
addition, our construction loan for a condominium project in Glendale, Arizona
requires cash contributions by the Company each time construction on a new
building is started. As of September 30, 2003, construction on one 8-unit
building has been started. The remaining five buildings in this phase of the
project are expected to begin construction at various dates through the summer
of 2004.

Payments on the subordinated debt are made only when cash flow from a land
sale, after payment of bank debt, exceeds our operating cash requirements. This
determination is made by our management. On June 28, 2002, Amortibanc, our
majority stockholder, contributed $719,000 of capital to the Company through
the conversion of subordinated debt to preferred stock. The preferred stock is
convertible into shares of our common stock, and has a cumulative dividend,
payable semi-annually. The dividend rate is 0% for the first year from the
date of issuance, and escalates each year until it reaches 7% in the sixth year
from the date of issuance. On September 29, 2003, Amortibanc contributed an
additional $293,106 of capital to the company through the conversion of
subordinated debt to equity.

In the normal course of our business, we have also entered into various
operating leases for equipment and vehicles.

Our primary future cash needs, both in the short term and in the long-term
will focus on funding operating expenses, financing the acquisition and
development of new projects and paying debt service. During the first nine
months of 2003, cash generated by land and lot sales was not sufficient to pay
our operating expenses. To meet our cash flow needs during fiscal 2004 it will
be necessary to supplement the land and lot sales with bulk sales of ranch
property, additional borrowings, or sales of one or more of our notes
receivable. Although there can be no assurances, management believes that cash
flow from operations coupled with existing cash and cash equivalent balances,
proceeds from bulk sales of property or the sale of one or more notes
receivable, along with borrowings from banks and other financial institutions
will generate sufficient cash to fund our operating and cash flow needs for the
next twelve months. To the extent that actual results or events differ from
our financial projections, our liquidity may be adversely affected.

We project that our capital expenditures for property and development will
be approximately $11.8 million over the next twelve months, but that only a
portion of that amount will need to be funded internally. The remainder will be
borrowed from banks and other financial institutions. As part of our business
strategy, we continuously review acquisition opportunities and proposals. We
expect to finance any future acquisitions with additional equity and debt
financing, to the extent available on attractive terms.

We hold $70,118 of third party notes receivable from the sale of property.
These notes are generally secured by the property sold and bear interest at
9.5% per year. We evaluate the collectibility of these notes based on the
payment history and the value of the collateral, and charge off any
uncollectible balances. As of September 30, 2003, there were no delinquencies
on any of these notes receivable.

Quantitative and Qualitative Disclosures About Market Risk

We do not have any derivative financial instruments as of September 30,
2003. We have entered into loan agreements and accepted notes receivable in
partial payment of land sales that subject our portfolio to interest rate risk.
At September 30, 2003, we held notes receivable in the amount of $70,118 that
we expect to hold until maturity. An increase in interest rates would result
in a decline in the market value of these notes but no reserve for this
contingency is considered necessary as we intend to hold these notes until
maturity. These notes currently bear interest at or near market rates. The
schedule below details these exposures at September 30, 2003, summarizes the
maturities and provides data on the calculated average interest rate that is
applicable to each segment.

10



---



##### Table of Contents



|                                |  |       |           |      |  |      |           |      |  |      |        |      |  |            |        |   |  |   |         |   |  |   |        |   |  |   |           |  
|------------------------------- |  | ----- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | ------ | ---- |  | ---------- | ------ | - |  | - | ------- | - |  | - | ------ | - |  | - | --------- | -
|                                |  | Total |           | 2004 |  | 2005 |           | 2006 |  | 2007 |        | 2008 |  | Thereafter
|                                |  |       |           |      |  |      |           |      |  |      |        |      |  |           
|Variable interest rate debt     |  | $     | 3,723,144 |      |  | $    | 2,940,251 |      |  | $    |       |      |  | $          |       |   |  | $ | 782,893 |   |  | $ |       |   |  | $ |          |  
|Average interest rate           |  |       | 6.68      | %    |  |      | 6.50      | %    |  |      | 6.50   | %    |  |            | 6.50   | % |  |   | 6.50    | % |  |   |       |   |  |   |          |  
|Fixed interest rate debt        |  |       | 303,444   |      |  |      | 33,696    |      |  |      | 35,120 |      |  |            | 28,521 |   |  |   | 16,322  |   |  |   | 15,708 |   |  |   | 174,077   |  
|Average interest rate           |  |       | 10.46     | %    |  |      | 10.48     | %    |  |      | 10.52  | %    |  |            | 10.52  | % |  |   | 10.59   | % |  |   | 10.71  | % |  |   | 10.84     | %
|Subordinated debt               |  |       | 3,319,684 |      |  |      |          |      |  |      |       |      |  |            |       |   |  |   |        |   |  |   |       |   |  |   | 3,319,684 |  
|Average interest rate           |  |       | 9.21      | %    |  |      |          |      |  |      |       |      |  |            |       |   |  |   |        |   |  |   |       |   |  |   | 9.21      | %
|Fixed interest rate
receivables |  |       | 70,118    |      |  |      | 2,766     |      |  |      | 3,041  |      |  |            | 3,342  |   |  |   | 3,674   |   |  |   | 4,039  |   |  |   | 53,256    |  
|Average interest rate           |  |       | 9.50      | %    |  |      | 9.50      | %    |  |      | 9.50   | %    |  |            | 9.50   | % |  |   | 9.50    | % |  |   | 9.50   | % |  |   | 9.50      | %

Recent Accounting Pronouncements

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure  An Amendment of FASB Statement 123 (SFAS 123). For entities
that change their accounting for stock-based compensation from the intrinsic
method to the fair value method under SFAS 123, the fair value method is to be
applied prospectively to those awards granted after the beginning of the period
of adoption (prospective method). The amendment permits two additional
transition methods for adoption of the fair value method. In addition to the
prospective method, the entity can choose to either (i) restate all periods
presented (retroactive restatement method) or (ii) recognize compensation
cost from the beginning of the fiscal year of adoption as if the fair value
method had been used to account for awards (modified prospective method).
For fiscal years beginning December 15, 2003, the prospective method will no
longer be allowed. We currently account for our stock-based compensation using
the intrinsic value method as proscribed by Accounting Principals Board Option
No. 25, Accounting for Stock issued to Employees and plan on continuing using
this method to account for stock options, therefore, we do not intend to adopt
the transition requirements as specified in SFAS 148. We have adopted the new
SFAS 148 disclosure requirement of SFAS 148 in these financial statements.

The FASB issued Interpretation (FIN) No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, in November 2002 and FIN No. 46, Consolidations of
Variable Interest Entities, in January 2003. FIN No. 45 is applicable on a
prospective basis for initial recognition and measurement provisions to
guarantees issued after December 2003; however, disclosure requirements are
effective immediately. FIN No. 45 requires a guarantor to recognize, at the
inception of a guarantee, a liability for the fair value of the obligations
undertaken in issuing the guarantee and expands the required disclosures to be
made by the guarantor about its obligation under certain guarantees that it has
issued. The adoption of FIN No. 45 did not have a material impact on our
financial position or results of operations. FIN No. 46 requires that a
company that controls another entity through interest other than voting
interest should consolidate such controlled entity in all cases for interim
periods beginning after June 15, 2003. The adoption of FIN No. 46 did not have
a material impact on our financial position or results of operations.




Item 7. Financial Statements

The consolidated financial statements of the Company listed in the index
appearing under Item 13(a)(1) hereof are filed as part of this Annual Report on
Form 10-KSB and are hereby incorporated by reference in this Item 7. See also
Index to Consolidated Financial Statements on page F-1 hereof.




Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None




PART III




Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

Directors and Executive Officers

The following table sets forth information regarding our current executive
officers and directors:

11



---



##### Table of Contents



|                     |  |     |    |        |  |                         |  |            |      | 
|-------------------- |  | --- | -- | ------ |  | ----------------------- |  | ---------- | ---- | 
|                     |  |     |    |        |  |                         |  | Officer or
|Name                 |  | Age |    | Office |  | Director Since         
|                     |  |     |    |        |  |                        
|Jay N. Torok         |  |     | 64 |        |  | Chairman and President  |  |            | 1994 | 
|Roger B. Clark (1)   |  |     | 68 |        |  | Board member            |  |            | 1989 | 
|Daniel Tracy (1) (2) |  |     | 63 |        |  | Board member            |  |            | 2003 | 
|Ron OConnor         |  |     | 45 |        |  | Chief Financial Officer |  |            | 2003 | 

(1)  Audit Committee member

(2)  designated financial expert

Our board of directors currently consists of three members. All directors
hold office until the next Annual Stockholders Meeting or until their
successors have been elected and qualified, or until their death, resignation,
retirement, removal, or disqualification. Vacancies in the existing board are
filed by majority vote of the remaining directors. A summary of the background
and experience of each of these individuals follows.

Jay N. Torok has served as Chairman of our board of directors, President
and Chief Executive Officer since 1994. In addition Mr. Torok has served as
Executive Vice President of Amortibanc, Inc. as well as other Amortibanc
affiliates engaged in real estate development or venture capital. Prior to
joining the Amortibanc group of companies, from 1986 to 1992, Mr. Torok served
as President and Chief Executive Officer of Lone Pine Capital, a venture
capital company specialized in acquisitions management. Prior to joining Lone
Pine Capital, from 1981 to 1985, Mr. Torok served as President and Chief
Executive Officer of Merrill Lynch Realty, Inc. Under Mr. Toroks management,
Merrill Lynch Realty, Inc. grew from 100 offices to over 380 offices in 38
cities in the United States and four foreign cities, becoming the worlds
largest real estate brokerage firm. Prior to joining Merrill Lynch Realty,
Inc., Mr. Torok served in various positions, including President of the
Container and Core Division of Clevepak Corporation, a former NYSE listed
company, President of Associated Forest Products, Inc., Vice President of
Finance of Wausau Paper Mills, a Nasdaq quoted company and Controller of the
Forest Products Division and the Land Development Division of Owens Illinois,
Inc., a Fortune 100 company. Mr. Torok received his M.B.A. from Dartmouth and
attended law school at Temple University.

Roger B. Clark has served as a member our board of directors since 1989.
Mr. Clark has been president and chief executive officer of GlennCon, Inc. a
leading supplier of goods and services to the worldwide public gaming industry
since 1984. From 1970 to 1983, Mr. Clark served in several positions with
Glendinning Companies, including president of Glendinning Companies, North
America from 1978-83, during which time he was responsible for all U.S.
operations, including the consulting, retail promotion, telecom and lottery
divisions. Prior to that, Mr. Clark was employed by Procter & Gamble. Mr. Clark
received his degree in economics from Amherst College.

Daniel
Tracy has served as member of our board of directors since 2003.
Mr. Tracy is a business consultant and director. Mr. Tracy is currently a
director of Edac Technologies Corporation, a publicly traded manufacturer of
aerospace components. Mr. Tracy is also a trustee of the YMCA of Metropolitan
Hartford, and Renbrook School. In 1998, Mr. Tracy concluded a 35-year career
with Arthur Andersen, an international accounting and consulting firm. From
1994 to 1998, Mr. Tracy was responsible for Andersens SEC practice in Asia and
lived in Hong Kong. In that role he counseled Asian companies involved in
private placements and public offerings in the U.S., London and Asian markets.
He worked on the first of such public offerings in the United States market for
companies in China, Taiwan and Korea, as well as offerings of companies in
Indonesia, Australia, the Philippines, Hong Kong, Singapore and Malaysia. From
1975 to 1994, Mr. Tracy was the partner in charge of Andersens audit and
accounting practice in Hartford, CT (1980-1994) and Rochester, NY (1975-1980).
Mr. Tracy received his bachelors degree and MBA from Dartmouth College.

Ron OConnor has served as Senior Vice President and Chief Financial
Officer since February 2003. Prior to joining Great Western, Mr. OConnor
served as Director of Worldwide Consolidations and SEC Reporting of ON
Semiconductor, a publicly traded semiconductor component manufacturer, since
2000. Prior to joining ON Semiconductor, Mr. OConnor served as Assistant
Corporate Controller for MicroAge, Inc. a publicly traded wholesale distributor
of microcomputer products traded on the NASDAQ Exchange, since 1997. Prior to
joining MicroAge, Mr. OConnor served as Chief Financial Officer for Sunrise
Educational Services, a chain of childcare centers. Mr. OConnor is a C.P.A,
and received his bachelors degree in accounting from the University of Northern
Iowa.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of equity securities of the Company. Officers, directors, and greater
than 10% stockholders are required to furnish us with copies of all Section
16(a) forms they file. Based solely on a review of our transfer books and
copies of Section 16(a) forms that we have received, we believe that each
person who, at any time during such fiscal year, was a director, officer or
beneficial owner of more than 10% of our common stock complies with all Section
16(a) filing requirements

12



---



##### Table of Contents



during such fiscal year, except that, Roger B. Clark and Daniel Tracy each
received stock options in February 2003 to purchase 50,000 shares of common
stock. Prior to December 29, 2003, Form 5s were filed with the Securities and
Exchange Commission to report these transactions and to report Mr. Tracys
status as a filing person.




Item 10. Compensation of Directors and Executive Officers

Each director who is not employed by us receives a meeting fee, in respect
of all Board of Directors and committee meetings attended on a single day, of
$1,000.

The following table provides certain summary information concerning the
compensation earned by our Chief Executive Officer. None of our other employees
earned more than $100,000 in the nine months ended September 30, 2003, or in
the years ended December 31, 2002 or 2001. The long-term compensation columns
have been omitted from this table because the balances were zero.

|                             |                                               |      |      |        |  |       |         |                  |  |   |   |   |  |   |              |       | 
|---------------------------- | --------------------------------------------- | ---- | ---- | ------ |  | ----- | ------- | ---------------- |  | - | - | - |  | - | ------------ | ----- | 
|                             |                                               |      |      |        |  |       |         |                  |  |   |   |   |  |   | Other Annual
|Name and Principal Positions |                                               | Year |      | Salary |  | Bonus |         | Compensation (1)
|                             |                                               |      |      |        |  |       |         |                 
|Jay N. Torok                 |                                               |      | 2003 |        |  | $     | 106,948 |                  |  | $ |  |   |  | $ | 3,115        |      
|                             | President, Chairman, Chief Executive Officer, |      |      | 2002   |  |       |         | 119,308          |  |   |   |  |  |   |              | 3,475 | 
|                             | Treasurer and Director                        |      |      | 2001   |  |       |         | 130,680          |  |   |   |  |  |   |              | 2,995 | 

(1)  Includes 401(k) Company match.

We have not made or contemplated making any advances to any of our
officers or directors.

We maintain a 401(k) profit sharing plan for the benefit of our eligible
employees. We make a matching contribution equal to 50% of each participants
eligible contributions to a maximum of 6% of each participants compensation.
We can also make a discretionary contribution determined annually by our Board
of Directors. In addition, we maintain medical and dental insurance plans for
our officers and employees.

Stock Options

The following table sets forth information regarding grants of options to
purchase our common stock to directors and executive officers during the nine
months ended September 30, 2003.

|               |  |              |        |              |  |          |       |            |  |      |      |            |  |     |           |  |  |                        |           |  |  |                      |   |  |  |   |   | 
|-------------- |  | ------------ | ------ | ------------ |  | -------- | ----- | ---------- |  | ---- | ---- | ---------- |  | --- | --------- |  |  | ---------------------- | --------- |  |  | -------------------- | - |  |  | - | - | 
|               |  |              |        |              |  |          |       |            |  |      |      |            |  |     |           |  |  |                        |           |  |  | Potential Realizable
|               |  | Number of    |        | Percent of   |  |          |       |            |  |      |      |            |  |     |           |  |  | Value at Assumed      
|               |  | Shares of    |        | Total        |  |          |       |            |  |      |      |            |  |     |           |  |  | Annual Rate of Stock  
|               |  | Common Stock |        | Options      |  |          |       |            |  |      |      |            |  |     |           |  |  | Price Appreciation for
|               |  | Underlying   |        | Granted to   |  |          |       |            |  |      |      |            |  |     |           |  |  | the Option Term       
|               |  | Options      |        | Employees in |  | Exercise |       |            |  |      |      | Expiration |  |    
|Name           |  | Granted      |        | Fiscal Year  |  | Price    |       | Grant Date |  | Date |      | 5%         |  | 10%
|               |  |              |        |              |  |          |       |            |  |      |      |            |  |    
|Roger B. Clark |  |              | 50,000 |              |  |          | 25.00 | %          |  | $    | 0.15 |            |  |     | 2/20/2003 |  |  |                        | 2/20/2013 |  |  | $                    |  |  |  | $ |  | 
|Daniel Tracy   |  |              | 50,000 |              |  |          | 25.00 | %          |  | $    | 0.15 |            |  |     | 2/20/2003 |  |  |                        | 2/20/2013 |  |  | $                    |  |  |  | $ |  | 

These options were granted under our stock option plan and will vest over
a period of three years. None of our officers or directors exercised options to
purchase our common stock during the nine months ended September 30, 2003.

Employment Contracts

We have entered into a five year employment agreement with Mr. Torok,
effective September 1, 2001, that provides for an annual salary of $125,000,
adjustable annually at the discretion of our Board of Directors, with a minimum
annual increase of 4%. Mr. Toroks agreement also provides for payments to Mr.
Torok in the event that his employment is terminated for any reason within its
five year term, including payment of the remaining annual salary at a rate of
50% of the rate provided for under the employment agreement, payable for a
period double the remaining term under the employment agreement. Under the
terms of Mr. Toroks employment agreement, the agreement shall be automatically
extended for one year at the end of each year during the term of the agreement,
expiring when Mr. Torok reaches the age of 70. Upon reaching the age of 70,
should either party wish to terminate the agreement, Mr. Torok shall be
entitled to receive payment of 50% of his last annual salary, each year for
five years, provided that Mr. Torok agrees and has made himself available to
provide at least 90 days of consulting services to the Company in each of the
five years.

13



---



##### Table of Contents






Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of December 15, 2003
concerning ownership of our common stock by each director and officer, by all
persons who hold of record or are known by us to hold beneficially of record 5%
or more of our outstanding shares and by all directors and officers as a group.
On December 1, 2003 there were 20,781,965 shares of our common stock
outstanding and entitled to vote.

|                                                            |                                             |           |              |             |            |  |     |      |  
|----------------------------------------------------------- | ------------------------------------------- | --------- | ------------ | ----------- | ---------- |  | --- | ---- | -
|                                                            |                                             |           | Shares       |             | Percent of
|                                                            |                                             |           | Beneficially |             | Shares    
|Name and Address of Beneficial Owner                        |                                             | Owned (1) |              | Outstanding
|                                                            |                                             |           |              |            
|Five Percent Stockholders:                                  |                                             |           |              |             |            |  |     |     
|                                                            | Amortibanc Investments, L.C. (2)            |           |              | 27,029,095  |            |  |     | 93.5 | %
|                                                            | Willard W. Garvey, Revocable Trust (2)      |           |              | 27,029,095  |            |  |     | 93.5 | %
|                                                            | Willard W. Garvey Trust Number Thirteen (2) |           |              | 27,029,095  |            |  |     | 93.5 | %
|                                                            | Jean Garvey, Trustee (2)                    |           |              | 27,029,095  |            |  |     | 93.5 | %
|Directors and Executive Officers:                           |                                             |           |              |             |            |  |     |     
|                                                            | Jay N. Torok (3) (6)                        |           |              | 1,129,916   |            |  |     | 5.2  | %
|                                                            | Ron OConnor (3) (7)                        |           |              | 100,000     |            |  |     | 0.5  | %
|                                                            | Roger B. Clark (4) (8)                      |           |              | 95,726      |            |  |     | 0.5  | %
|                                                            | Daniel Tracy (5) (9)                        |           |              |            |            |  |     |     |  
|All directors and Executive Officers as a Group (4
persons) |                                             |           | 1,325,642    |             |            |  | 6.1 | %   



|(1) |  | In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
a person is deemed to be the beneficial owner, for purposes of this table,
of any shares of common stock if such person has or shares voting power or
investment power with respect to such security, or has the right to
acquire beneficial ownership at any time within 60 days after December 15,
2003. In calculating the percentage of ownership, such shares are deemed
to be outstanding for the purpose of computing the percentage of shares of
common stock owned by such stockholder, but are not deemed outstanding for
the purpose of computing the percentage of shares of common stock owned by
any other stockholder. For purposes of this table, voting power is the
power to vote or direct the voting of shares and investment power is the
power to dispose or direct the disposition of shares.                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The address for Amortibanc Investments L.C., the Willard Garvey Revocable
Trust, the Willard W. Garvey Trust Number Thirteen and Jean Garvey is 7309
E. 21st Street North, Suite 120, Wichita, KS 67206. Amortibanc
Investments, L.C. disclaims beneficial ownership of these shares. The
Willard W. Garvey Revocable Trust and the Willard W. Garvey Trust Number
Thirteen are the only members of Amortibanc Investments L.C. and thereby
share beneficial ownership of these shares. Jean Garvey is the trustee of
the Willard W. Garvey Revocable Trust and the Willard W. Garvey Trust
Number Thirteen. Includes the assumed conversion of $719,000 of preferred
stock into 8,124,446 shares of common stock. Does not include 84,726
shares of common stock owned by David Theroux, Mrs. Garveys son-in law,
84,726 shares in the name of Paul Theroux for whom David Theroux is
custodian, or 84,726 shares in the name of Drake Theroux, for whom David
Theroux is custodian.
|   
|(3) |  | The address for Messrs. Torok and OConnor is 5115 North Scottsdale Road,
Suite 101, Scottsdale, AZ 85250.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) |  | The address for Mr. Clark is 6 Cardinal Road, Hilton Head, SC 29926.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(5) |  | The address for Mr. Tracy is 88 Wood Pond Road, West Hartford, CT
06107-3541.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(6) |  | Includes 166,069 shares of common stock owned by Mr. Torok, 10,165
shares owned by Lone Pine Industries, Inc., a company controlled by Mr.
Torok, 22,432 shares owned by Western Reserve Environmental Services, a
company in which Mr. Torok has an interest, primarily in a joint trust
with Anne V. Hodgkins, Mr. Toroks wife, and 931,250 shares of common
stock issuable upon the exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(7) |  | Includes 100,000 shares of common stock common stock issuable upon the
exercise of vested stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(8) |  | Includes 62,500 shares of common stock owned by Mr. Clark, 1,976 shares
owned by Clark-Bemis Lumber Company, a company controlled by Mr. Clark,
and 31,250 shares of common stock issuable upon the exercise of vested
stock options. Does not include 50,000 shares of common stock issuable
upon the exercise of stock options that will not vest within 60 days of
December 15, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

14



---



##### Table of Contents





|(9) |  | Does not include 50,000 shares of common stock issuable upon the exercise
of stock options that will not vest within 60 days of December 15, 2003.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------




Item 12. Certain Relationships and Related Transactions

Prior to March 1, 2003, we owned an 85% interest in Willow Springs Ranch,
LLC, with several minority investors owning the remaining 15%. The minority
investors included, among others, Lafayette Financial Services (a company that
is 50% owned by the Chairman of our board of directors) and another partnership
controlled by our Chairman. On March 1, 2003, we bought out the minority
investors interest in exchange for 640 acres of Arizona ranch land and
cancellation of a $134,962 payable.

Effective July 8, 2003, in exchange for a $650,000 note payable, we
acquired land in Stafford, Texas for $125,000 and also agreed to acquire a 34%
interest in #22 Stafford Springs LTD (Stafford Springs) for $525,000. Stafford Springs owns the Summer Park Duplexes, a
168-unit, HUD-financed, manufactured housing duplex rental community in
Stafford, Texas. The $525,000 paid for Stafford Spring is a deposit pending
receipt of final approval of this transaction by HUD. As of September 30,
2003, HUD approval had not yet been received. This note was paid off on
September 29, 2003 at a discount of $260,000. The Chairman of our board of
directors also owns 33% of Stafford Springs.

On September 19, 1997, Laguna Investments L.L.C. (Laguna Investments),
one of our subsidiaries, acquired a 25.52% ownership in Laguna at Arrowhead
Apartments L.L.C. (Laguna), which owns an apartment complex in Phoenix,
Arizona. On December 30, 2002, we sold a 7.1% interest in Laguna Investments
to Lafayette for $35,500 in partial payment of the note payable to Lafayette.
Lafayette is 50% owned by the Chairman of our Board of Directors. On September
29, 2003, we sold an additional 6.37% interest in Laguna Investments to
Lafayette for $31,855, also in partial payment of the note payable to
Lafayette. On September 29, 2003, we also sold a 3.0% interest in Laguna
Investments to Torok Partners, LLC for $15,000 in exchange for Torok Partners
minority interest in one of our projects. Torok Partners is controlled by the
Chairman of our Board of Directors. As a result of these transactions, at
September 30, 2003 we own 83.53% of Laguna Investments, which represents a
21.32% interest in Laguna .




Item 13. Exhibits and Reports on Form 8-K.

(a)  The following documents are filed as part of this Annual Report on
Form 10-KSB:



| |                                      
| | -------------------------------------
| | (1) Consolidated Financial Statements

|                                                                                                                                                           |  |         
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                                                                           |  | Page No.
|                                                                                                                                                           |  |         
|Report of Independent Certified Public Accountants                                                                                                         |  | F-2     
|Consolidated Balance Sheet as of September 30, 2003                                                                                                        |  | F-3     
|Consolidated Statements of Earnings for the nine months ended
September 30, 2003 and the year ended December 31,
2002                                      |  | F-4     
|Consolidated Statements of Stockholders Equity and
Comprehensive Income for the nine months ended September 30,
2003 and the year ended December 31, 2002 |  | F-5     
|Consolidated Statements of Cash Flows for the nine months ended
September 30, 2003 and the year ended December 31,
2002                                    |  | F-6     
|Notes to Consolidated Financial Statements                                                                                                                 |  | F-8     



| |             
| | ------------
| | (2) Exhibits

FORM 10-KSB EXHIBIT LIST

|        |  |                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                        
|No.     |  |                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                        
|10.1    |  | Articles of Incorporation of First National Realty Associates, Inc.
(Incorporated by reference to Exhibit 8 of Registration Statement
on Form S-18 (No. 33-30679-NY))                                                                  
|        |  |                                                                                                                                                                                                                                        
|10.2    |  | Agreement of Merger of First National Realty Associates, Inc. into
Emphatic Mergers (Incorporated by reference to Exhibit 14 of
Registration Statement on Form S-18 (No. 33-30679- NY))                                                
|        |  |                                                                                                                                                                                                                                        
|10.3    |  | Agreement and Plan of Merger between 1st Realty Investments, Inc.
and Great Western Land and Recreation, Inc. dated as of July 23,
2002 (Incorporated by reference to Exhibit 1 of Form 8-K filed with
the Commission on July 29, 2002)

15



---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                        
|No.     |  |                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.4    |  | Certificate of Merger of Great Western Land and Recreation, Inc., a
Delaware Corporation with and into 1st Realty Investments, Inc., a
Nevada Corporation                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.5    |  | Great Western Land and Recreation, Inc. Amended and Restated By-Laws                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.6    |  | Certificate of Designations of Series A Cumulative Convertible
Preferred Stock of 1st Realty Investments, Inc. (Incorporated by
reference to Appendix B of Schedule 14C of 1st Realty Investments,
Inc. filed with the Commission on January 27, 2003)                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.7    |  | Investment Agreement dated June 29, 2002 by and between Amortibanc
Investments, L.C. and Great Western Land and Recreation, Inc.                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.8    |  | Great Western Land and Recreation, Inc. Stock Option Plan
(Incorporated by reference to Appendix C of Schedule 14C of 1st
Realty Investments, Inc. filed with the Commission on January 27,
2003)                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.9    |  | Form of Great Western Land and Recreation, Inc. Stock Option
Agreement (Incorporated by reference to Exhibit 4.02 of Form S-4 of
Great Western Land and Recreation, Inc. filed with the Commission
on October 16, 2001)                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.10   |  | Agreement of Sale of Partnership Interest, dated July 8, 2003
between Great Western Land and Recreation, Inc. and Arete Real
Estate and Development Co.                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.11   |  | Sale and Subscription Agreement of Membership Interests in Laguna
Investments L.L.C. dated September 29, 2003 between Great Western
Land and Recreation, Inc. and Torok Partners, L.L.C.                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.12   |  | Sale and Subscription Agreement of Membership Interests in Laguna
Investments L.L.C. dated September 29, 2003 between Great Western
Land and Recreation, Inc. and Lafayette Financial Services, L.L.C.                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.13   |  | Employment Agreement between Great Western land and Recreation,
Inc. and Jay N. Torok dated September 1, 2001 (Incorporated by
reference to Exhibit 10.01 of Form S-4/A of Great Western Land and
Recreation, Inc. filed with the Commission on December 11, 2001)                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.14   |  | Contribution Agreement by and between Great Western Land and
Recreation, Inc., Amortibanc Management, L.C., Amortibanc
Investments, L.C., and GWLR, LLC dated as of August 6, 2001
(Incorporated by reference to Exhibit 10.02 of Form S-4/A of Great
Western Land and Recreation, Inc. filed with the Commission on
December 11, 2001)
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.15   |  | Promissory Note dated January 3, 2002, by and between GWLR Wagon
Bow Ranch, LLC and Bank Midwest                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.16   |  | Secured Promissory Note dated September 25, 2002, between National
Bank of Arizona and Glendale Condominiums, LLC                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.17   |  | Promissory Note dated September 25, 2002, between National Bank of
Arizona and Glendale Condominiums, LLC                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.18   |  | Loan Agreement dated June 23, 2000, by and between Willow Spring
Ranch, LLC and Bank Midwest (Incorporated by reference to Exhibit
10.21 of Form S-4/A of Great Western Land and Recreation, Inc.
filed with the Commission on December 11, 2001)                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.19   |  | Great Western Land and Recreation, Inc. Code of Business Ethics                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                        
|11      |  | Statement RE: Computation of per Share Earnings (Loss)                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                        
|21      |  | List of Subsidiaries                                                                                                                                                                                                                                                                                                                   

16



---



##### Table of Contents



|        |  |                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                      
|No.     |  |                                                                                                                                      
|        |  |                                                                                                                                      
|31.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                      
|31.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                      
|32.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                      
|32.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|        |  |                                                                                                                                      
|99.1    |  | Risk Factors                                                                                                                         

(b)  Reports on Form 8-K during the quarter ended September 30, 2003



| |     
| | ----
| | None




Item 14. Controls and Procedures

(a)  We maintain disclosure controls and procedures (as defined in
Securities Exchange Act 1934 Rules 13a-14(c) and 15d-14(c)) that are designed
to ensure that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms, and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Principal Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this annual report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our Chief Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures were
effective.

(b)  There have not been any significant changes in our internal controls
or in other factors that could significantly affect these controls subsequent
to the date of their evaluation. There were no significant deficiencies or
material weaknesses, and therefore no corrective actions were taken.

17



---



##### Table of Contents






SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                        |  |                                        
|----------------------- |  | ---------------------------------------
|                        |  | GREAT WESTERN LAND AND RECREATION, INC.
|                        |  | (Registrant)                           
|Date: December 29, 2003 |  | By /s/ Jay N. Torok                    
|                        |  |                                        
|                        |  | Jay N. Torok
Chairman of the Board     

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|                               |  |                                                                                     |  |                  
|------------------------------ |  | ----------------------------------------------------------------------------------- |  | -----------------
|Signatures                     |  | Title                                                                               |  | Date             
|                               |  |                                                                                     |  |                  
|/s/ Jay N. Torok

Jay N. Torok |  | Chairman of the Board (Principal Executive Officer)                                 |  | December 29, 2003
|                               |  |                                                                                     |  |                  
|/s/ Ron OConnor

Ron OConnor |  | Chief Financial Officer (Principal Financial
Officer; Principal Accounting Officer) |  | December 29, 2003
|                               |  |                                                                                     |  |                  
|/s/

Roger B. Clark            |  | Director                                                                            |  | December 29, 2003
|                               |  |                                                                                     |  |                  
|/s/ Daniel Tracy
Daniel Tracy  |  | Director                                                                            |  | December 29, 2003

18



---



##### Table of Contents



GREAT WESTERN LAND AND RECREATION, INC.




CONTENTS

|                                                                                                                                                            |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                            |  | PAGE
|                                                                                                                                                            |  |     
|Report of Independent Certified Public Accountants                                                                                                          |  |      | F-2 | 
|Consolidated Balance Sheet, September 30, 2003                                                                                                              |  |      | F-3 | 
|Consolidated Statements of Earnings, for the nine months ended
September 30, 2003 and the year ended December 31, 2002                                      |  |      | F-4 | 
|Consolidated Statements of Stockholders Equity and Comprehensive
Income, for the nine months ended September 30, 2003
and the year ended December 31, 2002 |  |      | F-5 | 
|Consolidated Statements of Cash Flows, for the nine months ended
September 30, 2003 and the year ended December 31, 2002                                    |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                                                                                  |  |      | F-8 | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Great Western Land and Recreation, Inc.

We have audited the accompanying consolidated balance sheet of Great Western
Land and Recreation, Inc. as of September 30, 2003 and the related consolidated
statements of earnings, stockholders equity and comprehensive income and cash
flows for the nine months ended September 30, 2003 and for the year ended
December 31, 2002. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Great Western
Land and Recreation, Inc. as of September 30, 2003 and the consolidated results
of its operations and its consolidated cash flows for the nine months ended
September 30, 2003 and for the year ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

Grant Thornton LLP

Fountain Hills, Arizona
November 6, 2003

F-2



---



##### Table of Contents






GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED BALANCE SHEET
September 30, 2003

|                                     |                                                                    |                                                                                                                              |                            |           |           |           | 
|------------------------------------ | ------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | --------- | --------- | 
|ASSETS                               |                                                                    |                                                                                                                              |                            |          
|                                     | Cash and cash equivalents                                          |                                                                                                                              | $                          | 1,100,844 |          
|                                     | Notes receivable                                                   |                                                                                                                              |                            | 70,118    |          
|                                     | Land held for development and sale                                 |                                                                                                                              |                            | 9,321,515 |          
|                                     | Receivable from related entities                                   |                                                                                                                              |                            | 68,080    |          
|                                     | Property and equipment, net of accumulated
depreciation of $42,583 |                                                                                                                              |                            | 201,727   |          
|                                     | Other                                                              |                                                                                                                              |                            | 985,046   |          
|                                     |                                                                    |                                                                                                                              |                            |           |          
|                                     |                                                                    | $                                                                                                                            | 11,747,330                 |          
|                                     |                                                                    |                                                                                                                              |                            |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                    |                                                                                                                              |                            |          
|                                     | Liabilities                                                        |                                                                                                                              |                            |           |          
|                                     |                                                                    | Notes payable                                                                                                                |                            | $         | 4,026,588 |          
|                                     |                                                                    | Subordinated debt                                                                                                            |                            |           | 3,319,684 |          
|                                     |                                                                    | Payable to related entities                                                                                                  |                            |           | 745,427   |          
|                                     |                                                                    | Accounts payable and other accrued liabilities                                                                               |                            |           | 620,586   |          
|                                     |                                                                    |                                                                                                                              |                            |           |          
|                                     |                                                                    |                                                                                                                              | Total liabilities          |           |           | 8,712,285 | 
|                                     | Minority interest                                                  |                                                                                                                              |                            | 46,843    |          
|                                     | Stockholders equity                                               |                                                                                                                              |                            |           |          
|                                     |                                                                    | Preferred stock, $0.001 par value; 10,000,000 shares
authorized; 14,380 issued and outstanding;
liquidation value - $719,000 |                            |           | 660,409   |          
|                                     |                                                                    | Common stock, $0.001 par value; 30,000,000 shares
authorized; 20,781,965 shares issued and outstanding                       |                            |           | 20,782    |          
|                                     |                                                                    | Additional paid-in capital                                                                                                   |                            |           | 2,595,301 |          
|                                     |                                                                    | Accumulated other comprehensive loss                                                                                         |                            |           | (733      | )        
|                                     |                                                                    | Accumulated deficit                                                                                                          |                            |           | (287,557  | )        
|                                     |                                                                    |                                                                                                                              |                            |           |          
|                                     |                                                                    |                                                                                                                              | Total stockholders equity |           |           | 2,988,202 | 
|                                     |                                                                    |                                                                                                                              |                            |           |          
|                                     |                                                                    | $                                                                                                                            | 11,747,330                 |          
|                                     |                                                                    |                                                                                                                              |                            |           |          

The accompanying notes are an integral part of this consolidated financial statement.

F-3



---



##### Table of Contents






GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF EARNINGS

|                                                                 |                                            |   |               |            |              |   |           |            |  
|---------------------------------------------------------------- | ------------------------------------------ | - | ------------- | ---------- | ------------ | - | --------- | ---------- | -
|                                                                 |                                            |   | Nine          |            |              |   |          
|                                                                 |                                            |   | months ended  |            | Year ended  
|                                                                 |                                            |   | September 30, |            | December 31,
|                                                                 |                                            |   | 2003          |            | 2002        
|                                                                 |                                            |   |               |            |             
|Land and lot sales                                               |                                            | $ | 2,263,056     |            |              | $ | 4,055,576 |           
|Cost of land and lot sales                                       |                                            |   | 1,182,336     |            |              |   | 1,694,716 |           
|                                                                 |                                            |   |               |            |              |   |           |           
|                                                                 | Gross profit on sales                      |   |               | 1,080,720  |              |   |           | 2,360,860  |  
|Operating, selling, general and administrative expense           |                                            |   | 1,112,925     |            |              |   | 2,401,335 |           
|                                                                 |                                            |   |               |            |              |   |           |           
|                                                                 |                                            |   | (32,205       | )          |              |   | (40,475   | )         
|Other income (expense)                                           |                                            |   |               |            |              |   |           |           
|                                                                 | Interest expense                           |   |               | (382,953   | )            |   |           | (683,452   | )
|                                                                 | Interest income                            |   |               | 112,891    |              |   |           | 155,738    |  
|                                                                 | Equity in losses of unconsolidated company |   |               | (53,530    | )            |   |           |           |  
|                                                                 | Gain on settlement of note payable         |   |               | 260,000    |              |   |           |           |  
|                                                                 | Settlement of quepasa.com claim            |   |               |           |              |   |           | 405,750    |  
|                                                                 | Other income                               |   |               | 111,814    |              |   |           | 177,311    |  
|                                                                 |                                            |   |               |            |              |   |           |           
|                                                                 |                                            |   | 48,222        |            |              |   | 55,347    |           
|                                                                 |                                            |   |               |            |              |   |           |           
|Earnings before minority interest                                |                                            |   | 16,017        |            |              |   | 14,872    |           
|Minority interest                                                |                                            |   | (832          | )          |              |   | (1,009    | )         
|                                                                 |                                            |   |               |            |              |   |           |           
|Net earnings                                                     |                                            | $ | 15,185        |            |              | $ | 13,863    |           
|                                                                 |                                            |   |               |            |              |   |           |           
|Net earnings per common and common
equivalent share              |                                            |   |               |            |              |   |           |           
|                                                                 | Basic and diluted                          |   | $             |           |              |   | $         |           |  
|                                                                 |                                            |   |               |            |              |   |           |           
|Weighted average common and common
equivalent shares outstanding |                                            |   |               |            |              |   |           |           
|                                                                 | Basic and diluted                          |   |               | 20,781,965 |              |   |           | 20,781,965 |  
|                                                                 |                                            |   |               |            |              |   |           |           

The accompanying notes are an integral part of these consolidated financial statements.

F-4



---



##### Table of Contents






GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
Nine months ended September 30, 2003 and year ended December 31, 2002

|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|----------------------------------------------------------------- |  | --------------- | ------ | ------------ |  | ---------- | ------- | ------- |  | ----------- | ---------- | ------- |  | ------- | ------ | ------------- |  | - | --------- | - |  | ----------- | ------ | - |  | - | -------- | - |  | - | ------ | -
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  | Accumulated |        |   |  |   |          |   |  |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  | Other       |        |   |  |   |          |   |  |  
|                                                                  |  | Preferred Stock |        | Common Stock |  | Additional |         | compre- |  |             |            |         |  | Compre-
|                                                                  |  |                 |        |              |  | paid-in    |         | hensive |  | Accumulated |            | hensive
|                                                                  |  | Shares          |        | Amount       |  | Shares     |         | Amount  |  | capital     |            | loss    |  | deficit |        | income (loss)
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |              
|Balance at December 31, 2001, as
previously reported              |  |                 |       |              |  | $          |        |         |  |             | 18,904,649 |         |  | $       | 18,905 |               |  | $ | 2,092,366 |   |  | $           | (9,777 | ) |  | $ | (174,889 | ) |  | $ |       |  
|Adjustments for reverse acquisition                               |  |                 |       |              |  |            |        |         |  |             | 1,877,316  |         |  |         | 1,877  |               |  |   | 61,043    |   |  |             |       |   |  |   | (141,716 | ) |  |   |       |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|Balance at December 31, 2001, as
restated                         |  |                 |       |              |  |            |        |         |  |             | 20,781,965 |         |  |         | 20,782 |               |  |   | 2,153,409 |   |  |             | (9,777 | ) |  |   | (316,605 | ) |  |   |       |  
|Subordinated debt converted to
capital                            |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   | 90,195    |   |  |             |       |   |  |   |         |   |  |   |       |  
|Issuance of preferred stock in
exchange for subordinated debt     |  |                 | 14,380 |              |  |            | 604,929 |         |  |             |           |         |  |         |       |               |  |   | 114,071   |   |  |             |       |   |  |   |         |   |  |   |       |  
|Amortization of discount on
preferred stock                       |  |                 |       |              |  |            | 23,630  |         |  |             |           |         |  |         |       |               |  |   | (23,630   | ) |  |             |       |   |  |   |         |   |  |   |       |  
|Change in unrealized loss on
marketable securities                |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   |          |   |  |             | 9,074  |   |  |   |         |   |  |   | 9,074  |  
|Net earnings                                                      |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   |          |   |  |             |       |   |  |   | 13,863   |   |  |   | 13,863 |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|Comprehensive income for the year
ended December 31, 2002         |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  | $ | 22,937 |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|Balance, December 31, 2002                                        |  |                 | 14,380 |              |  |            | 628,559 |         |  |             | 20,781,965 |         |  |         | 20,782 |               |  |   | 2,334,045 |   |  |             | (703   | ) |  |   | (302,742 | ) |  | $ |       |  
|Subordinated debt converted to
capital                            |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   | 293,106   |   |  |             |       |   |  |   |         |   |  |   |       |  
|Amortization of discount on
preferred stock                       |  |                 |       |              |  |            | 31,850  |         |  |             |           |         |  |         |       |               |  |   | (31,850   | ) |  |             |       |   |  |   |         |   |  |   |       |  
|Change in unrealized loss on
marketable securities                |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   |          |   |  |             | (30    | ) |  |   |         |   |  |   | (30    | )
|Net earnings                                                      |  |                 |       |              |  |            |        |         |  |             |           |         |  |         |       |               |  |   |          |   |  |             |       |   |  |   | 15,185   |   |  |   | 15,185 |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|Comprehensive income for the nine
months ended September 30, 2003 |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  | $ | 15,155 |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  
|Balance, September 30, 2003                                       |  |                 | 14,380 |              |  | $          | 660,409 |         |  |             | 20,781,965 |         |  | $       | 20,782 |               |  | $ | 2,595,301 |   |  | $           | (733   | ) |  | $ | (287,557 | ) |  |   |        |  
|                                                                  |  |                 |        |              |  |            |         |         |  |             |            |         |  |         |        |               |  |   |           |   |  |             |        |   |  |   |          |   |  |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.

F-5



---



##### Table of Contents






GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |              |           |          |          |  
|------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------- | --------- | ------------- | ------- | ------------ | --------- | -------- | -------- | -
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           | Nine          |         |              |           |         
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           | months ended  |         | Year ended  
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           | September 30, |         | December 31,
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           | 2003          |         | 2002        
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|Cash flows from operating activities                                |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    | Net earnings                                                                                                                                         |                                                               | $                                              | 15,185                                              |           |               | $       | 13,863       |          
|                                                                    | Adjustments to reconcile net earnings to net cash provided
by operating activities:                                                                  |                                                               |                                                |                                                     |           |               |         |              |          
|                                                                    |                                                                                                                                                      | Depreciation and amortization                                 |                                                |                                                     | 35,762    |               |         |              | 21,916    |         
|                                                                    |                                                                                                                                                      | Bad debt expense                                              |                                                |                                                     |          |               |         |              | 32,208    |         
|                                                                    |                                                                                                                                                      | Accrued interest expense included in debt                     |                                                |                                                     | 334,253   |               |         |              | 519,792   |         
|                                                                    |                                                                                                                                                      | Deferred income taxes                                         |                                                |                                                     | 858       |               |         |              | (12,937   | )       
|                                                                    |                                                                                                                                                      | Accretion of interest income                                  |                                                |                                                     | (9,254    | )             |         |              | (85,587   | )       
|                                                                    |                                                                                                                                                      | Collection of notes receivable relating to prior years sales |                                                |                                                     | 1,560,935 |               |         |              | 1,267,301 |         
|                                                                    |                                                                                                                                                      | Uncollected notes receivable from current year sales          |                                                |                                                     | (47,230   | )             |         |              | (109,522  | )       
|                                                                    |                                                                                                                                                      | Gain on settlement of quepas.com claim                        |                                                |                                                     |          |               |         |              | (405,750  | )       
|                                                                    |                                                                                                                                                      | Loss on disposal of property, plant and equipment             |                                                |                                                     | 14,059    |               |         |              |          |         
|                                                                    |                                                                                                                                                      | Equity in losses of unconsolidated companies                  |                                                |                                                     | 53,530    |               |         |              |          |         
|                                                                    |                                                                                                                                                      | Minority interests in earnings of consolidated subsidiaries   |                                                |                                                     | 832       |               |         |              | 1,009     |         
|                                                                    |                                                                                                                                                      | Gain on settlement of note payable                            |                                                |                                                     | (260,000  | )             |         |              |          |         
|                                                                    |                                                                                                                                                      | Gain on sale of investment in unconsolidated company          |                                                |                                                     | (37,349   | )             |         |              |           |         
|                                                                    |                                                                                                                                                      | Changes in operating assets and liabilities:                  |                                                |                                                     |           |               |         |              |           |         
|                                                                    |                                                                                                                                                      |                                                               | Land held for development and sale             |                                                     |           | (808,273      | )       |              |           | (262,364 | )       
|                                                                    |                                                                                                                                                      |                                                               | Other assets                                   |                                                     |           | (740,016      | )       |              |           | 249,693  |         
|                                                                    |                                                                                                                                                      |                                                               | Accounts payable and other accrued liabilities |                                                     |           | 296,288       |         |              |           | (180,871 | )       
|                                                                    |                                                                                                                                                      |                                                               | Deferred income                                |                                                     |           |              |         |              |           | (286,492 | )       
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    |                                                                                                                                                      |                                                               |                                                | Net cash provided by operating activities           |           |               | 409,580 |              |           |          | 762,259  |  
|Cash flows from investing activities                                |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    | Increase (decrease) in advances to/from related parties                                                                                              |                                                               |                                                | 46,628                                              |           |               |         | (169,071     | )        
|                                                                    | Investments in unconsolidated companies                                                                                                              |                                                               |                                                | (53,530                                             | )         |               |         |             |          
|                                                                    | Proceeds from sale of property and equipment                                                                                                         |                                                               |                                                | 11,577                                              |           |               |         |             |          
|                                                                    | Purchases of property and equipment                                                                                                                  |                                                               |                                                | (47,215                                             | )         |               |         | (46,128      | )        
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    |                                                                                                                                                      |                                                               |                                                | Net cash used in investing activities               |           |               | (42,540 | )            |           |          | (215,199 | )
|Cash flows from financing activities                                |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    | Issuance of notes payable                                                                                                                            |                                                               |                                                | 1,368,549                                           |           |               |         | 3,793,147    |          
|                                                                    | Payments on notes payable                                                                                                                            |                                                               |                                                | (1,289,114                                          | )         |               |         | (3,483,807   | )        
|                                                                    | Decrease in subordinated debt                                                                                                                        |                                                               |                                                |                                                    |           |               |         | (565,000     | )        
|                                                                    | Minority investment in consolidated subsidiary                                                                                                       |                                                               |                                                |                                                    |           |               |         | 45,000       |          
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    |                                                                                                                                                      |                                                               |                                                | Net cash provided by (used in) financing activities |           |               | 79,435  |              |           |          | (210,660 | )
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|Net increase in cash and cash equivalents                           |                                                                                                                                                      |                                                               | 446,475                                        |                                                     |           |               | 336,400 |             
|Cash and cash equivalents at beginning of period                    |                                                                                                                                                      |                                                               | 654,369                                        |                                                     |           |               | 317,969 |             
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|Cash and cash equivalents at end of period                          |                                                                                                                                                      | $                                                             | 1,100,844                                      |                                                     |           | $             | 654,369 |             
|                                                                    |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|Supplemental disclosure of cash flow information:                   |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|Cash paid during the period for interest, net of amount capitalized |                                                                                                                                                      | $                                                             | 58,394                                         |                                                     |           | $             | 218,681 |             
|                                                                    | Cash
paid during the period for income taxes                                                                                                         |                                                               |                                                | 14,960                                              |           |               |         |             |          
|Noncash investing and financing activities                          |                                                                                                                                                      |                                                               |                                                |                                                     |           |               |         |             
|                                                                    | Transfer of Wagon Bow Ranch land in exchange for minority interest in Willow
Springs Ranch, LLC and a reduction in the payable to minority investors |                                                               |                                                | 134,962                                             |           |               |         |             |          
|                                                                    | Subordinated debt converted into preferred stock                                                                                                     |                                                               |                                                |                                                    |           |               |         | 604,929      |          
|                                                                    | Subordinated debt converted to capital                                                                                                               |                                                               |                                                | 293,106                                             |           |               |         | 204,266      |          
|                                                                    | Accrued interest capitalized included in debt                                                                                                        |                                                               |                                                | 41,989                                              |           |               |         | 14,178       |          
|                                                                    | Offset of note payable for quepasa.com claim                                                                                                         |                                                               |                                                |                                                    |           |               |         | 405,750      |          

F-6



---



##### Table of Contents



| |                                                                                                                |  |  |        |  |               |  |              |  |  |  | 
| | -------------------------------------------------------------------------------------------------------------- |  |  | ------ |  | ------------- |  | ------------ |  |  |  | 
| |                                                                                                                |  |  |        |  | Nine          |  |              |  | 
| |                                                                                                                |  |  |        |  | months ended  |  | Year ended  
| |                                                                                                                |  |  |        |  | September 30, |  | December 31,
| |                                                                                                                |  |  |        |  | 2003          |  | 2002        
| |                                                                                                                |  |  |        |  |               |  |             
| | Sale of investment in unconsolidated company in exchange for
partial payment of advances from related entities |  |  | 31,855 |  |               |  | 35,500       | 
| | Sale of investment in unconsolidated company in exchange for
minority interest                                 |  |  | 15,000 |  |               |  |             | 

The accompanying notes are an integral part of these consolidated financial statements.

F-7



---



##### Table of Contents






GREAT WESTERN LAND AND RECREATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements follows.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.Basis of presentation and business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | The accompanying consolidated financial statements as of September 30, 2003
and for the nine months ended September 30, 2003 and the year ended December
31, 2002 include the accounts of Great Western Land and Recreation, Inc.
(formerly 1st Realty Investments, Inc.) and its wholly- and majority-owned
subsidiaries (collectively, the Company). Investments in companies that
represent 20% to 50% of the ownership interest are accounted for on the
equity method. Investments in companies that represent less than a 20%
ownership interest are accounted for on the cost basis. All material
intercompany accounts and transactions have been eliminated.
|
| | The Company is engaged principally in the acquisition, development and sale
of land located in Houston and College Station Texas, Phoenix and Glendale,
Arizona and certain country areas of New Mexico and Arizona. Transactions
include both retail and nonretail land sales, depending upon the progress of
the development and sub-division process.                                                                                                                                                                                                                                                                                                               



| |                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company maintains its records and prepares its financial statements in
accordance with accounting principles generally accepted in the United States
of America for real estate operations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On July 23, 2002, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement or the Agreement) with Great Western Land and
Recreation, Inc., a Delaware corporation (Great Western Delaware). Under
the Merger Agreement, the Company agreed to undertake a series of
transactions the result of which would be the transfer of control of the
Company to Amortibanc Investments, LC, (Amortibanc), the stockholder of
Great Western Delaware, and the merger of Great Western Delaware into the
Company. The Company would be the surviving entity. The transaction also
involved the election of new directors of the Company and the amendment of
the Companys Articles of Incorporation to change its name to Great Western
Land and Recreation, Inc. The Board of Directors of the Company unanimously
approved the Merger Agreement and the other transactions to be undertaken and
the holders of a majority of the outstanding stock of the Company approved
the transactions in writing on July 25, 2002. On July 23, 2002 the
stockholder of Great Western Delaware consented in writing to the Merger
Agreement transactions. Under applicable Nevada law, written consent by the
holders of a majority of the outstanding stock of the Company to the
transactions outlined in the Agreement was sufficient to approve the
transactions, without a meeting or vote of all of the stockholders. This
transaction became effective on February 20, 2003. Immediately following the
merger, former 1st Realty stockholders owned approximately 9% of the Company
and Amortibanc owned approximately 91% of the Company (94% assuming the
conversion of the preferred stock into common stock).



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company expects that the Merger will be treated as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended. If the Merger qualifies as a tax-free reorganization, no
gain or loss will be recognized for income tax purposes by either the Company
or Great Western Delaware as a result of the acquisition. There also should
not be any material tax effects to the existing stockholders of the Company
as a result of the transaction. However, neither the Company nor Great
Western Delaware requested a tax ruling from the Internal Revenue Service
with respect to the transaction. Accordingly, the Company can give no
assurance that the transaction will qualify as a tax-free reorganization. The
Company has accounted for its acquisition of Great Western Delaware as a
reverse acquisition, with Great Western Delaware the acquirer and the Company
the acquiree for reporting purposes. Prior to September 2000,
1st Realty was
a dormant non-operating company. Its operations up to the date of the Merger
were solely the result of the series of transactions it entered into with
Great Western Delaware. As a result, the assets and liabilities of both
companies have been combined at their historical cost. The accompanying
consolidated financial statements and notes are presented as if the Merger
were consummated on January 1, 2002.



| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On June 4, 2003 the Company changed its year-end from December 31 to
September 30. As a result of this change, fiscal 2003 was a short year,
which ended on September 30, 2003 and consisted of only nine months.



| |                      
| | ---------------------
| | 2.Revenue recognition



| |                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company records the sale of real estate under the full accrual method
when ownership rights and obligations have transferred to the buyer, the
buyers initial and continuing investments provide a sufficient commitment to
purchase and collectibility of the

F-8



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | sales price is reasonably assured. Profit is primarily recognized when the
sale has been consummated. The installment method (profit recognized as a
portion of each cash payment received), is used to recognize profit for
certain real estate sales that do not meet the criteria for full accrual
recognition.



| |                                     
| | ------------------------------------
| | 3.Land held for development and sale



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Land held for development and sale is carried at cost plus development costs,
loan costs, interest and real estate taxes incurred during the period the
development is in process. Impairment of the carrying cost of land is
evaluated by comparison of estimated fair value less cost to sell. Estimated
fair value less cost to sell is based upon sales in the normal course of
business less estimated development cost to complete and dispose of the
property. The accumulated land cost is charged to cost of sales based upon
the computed average lot cost at the time of sale, which is not
materially different than the relative fair value basis.



| |                   
| | ------------------
| | 4.Notes receivable



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notes receivable are from purchasers of land sold by the Company and are
stated at amounts due from purchasers. The Company evaluates the
collectibility of the notes receivable and charges off any uncollectible
balances. Notes receivable from the retail sale of certain real estate lots
and parcels are sold to third parties. The Company retains no ownership or
remaining interest in these properties or responsibilities for any future
expenses related to these properties except that the notes are subject to
recourse. See Note K for additional discussion.

| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company sells the majority of its notes receivable to an
unrelated third party with recourse for credit defaults. The buyer
holds back a portion of the sales proceeds, reported on the balance
sheet as 200,330, net of an allowance for recourse losses. The
Company primarily considers downpayments, sales of other properties
in the development, and payment history in making decisions about the
needed allowance.



| |                    
| | -------------------
| | 5.Advertising costs



| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Advertising costs are expensed as incurred and are included in operating,
selling, general and administrative expense. Total advertising cost was
$73,025 and $162,335 for the nine months ended September 30, 2003 and the
year ended December 31, 2002, respectively.



| |               
| | --------------
| | 6.Income taxes



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income taxes are accounted for using the asset and liability method. Under
this method, deferred income tax assets and liabilities are recognized for
the future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred income tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which these temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
A valuation allowance is provided for deferred tax assets that are not
expected to be recovered from future operations.



| |                   
| | ------------------
| | 7.Use of estimates



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is responsible
for making estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates and it is reasonably possible that the allowance
established for recourse chargeback could materially change in the
near future.



| |                   
| | ------------------
| | 8.Cash equivalents



| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.

F-9



---



##### Table of Contents





| |                        
| | -----------------------
| | 9.Financial instruments



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The carrying amounts reflected in the consolidated balance sheet for cash and
cash equivalents approximate fair value due to the short maturities of the
instruments. Notes receivable approximate fair value considering the quality
of the credit, payment terms, property sold and market based interest rates.
Related entities receivables/payables bear market-based rates and
approximate fair value. The notes payable and subordinated debt also
approximate fair value based on variable interest rates, payment terms and
the Companys current incremental borrowing rates for similar type borrowing
arrangements.



| |                                 
| | --------------------------------
| | 10.Net earnings (loss) per share



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basic net earnings (loss) per share is calculated by dividing net earnings
(loss) less preferred stock dividends applicable to the period by the
20,781,965 common shares. The 20,781,965 common shares issued and
outstanding upon the completion of the Merger are assumed to be outstanding
for all periods presented. Diluted net earnings (loss) per share is the same
as basic net earnings (loss) per share because the convertible preferred
stock and the stock options are anti-dilutive and therefore excluded from the
computation.



| |                             
| | ----------------------------
| | 11. Stock-based compensation



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As described more fully in Note M, the Company measures compensation expense relating to employee stock awards
in accordance with Accounting Principles Board Opinion No. 25 Accounting for
Stock Issued to Employees (APB 25). The Company measures compensation
expense relating to non-employee stock awards in accordance with Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123).

NOTE B  NOTES RECEIVABLE

Notes receivable at September 30, 2003 consist of notes receivable from lot
sales to individuals, bearing interest at 9.5%, payable in monthly aggregated
principal and interest payments of $780 through May 2023. These notes are
collateralized by the lots sold.

Maturities for notes receivable as of September 30, 2003 follow:

|                          |            |   |        |        | 
|------------------------- | ---------- | - | ------ | ------ | 
|Year ending September 30, |            |   |        |       
|                          | 2004       |   |        | 2,766  | 
|                          | 2005       |   |        | 3,041  | 
|                          | 2006       |   |        | 3,342  | 
|                          | 2007       |   |        | 3,674  | 
|                          | 2008       |   |        | 4,039  | 
|                          | Thereafter |   |        | 53,256 | 
|                          |            |   |        |       
|                          |            | $ | 70,118 |       
|                          |            |   |        |       

NOTE C  LAND HELD FOR DEVELOPMENT AND SALE

The cost of land held for development and sale is comprised of the following at
September 30, 2003:

|                       |  |            |           |            |  |            |           |       |  |   |           |  |  |   |            | 
|---------------------- |  | ---------- | --------- | ---------- |  | ---------- | --------- | ----- |  | - | --------- |  |  | - | ---------- | 
|                       |  | Houston,   |           | New        |  |            |           |       |  |   |           | 
|                       |  | Texas      |           | Mexico     |  | Arizona    |           |       |  |  
|                       |  | properties |           | properties |  | properties |           | Total
|                       |  |            |           |            |  |            |           |      
|Land acquisition costs |  | $          | 2,564,818 |            |  | $          | 4,661,638 |       |  | $ | 3,426,945 |  |  | $ | 10,653,401 | 
|Development costs      |  |            | 2,054,587 |            |  |            | 401,572   |       |  |   | 1,521,472 |  |  |   | 3,977,631  | 
|Capitalized interest   |  |            | 288,504   |            |  |            | 68,818    |       |  |   | 119,396   |  |  |   | 476,718    | 
|Capitalized taxes      |  |            | 98,262    |            |  |            |          |       |  |   | 41,942    |  |  |   | 140,204    | 
|Capitalized loan costs |  |            | 174,388   |            |  |            | 58,584    |       |  |   | 24,317    |  |  |   | 257,289    | 
|                       |  |            |           |            |  |            |           |       |  |   |           |  |  |   |            | 

F-10



---



##### Table of Contents



|                                            |       |  |   |            |           |  |            |   |           |            |  |  |       |           |           |  |  |   |           |           
|------------------------------------------- | ----- |  | - | ---------- | --------- |  | ---------- | - | --------- | ---------- |  |  | ----- | --------- | --------- |  |  | - | --------- | ----------
|                                            |       |  |   | Houston,   |           |  | New        |   |           |            |  |  |       |           |           |  | 
|                                            |       |  |   | Texas      |           |  | Mexico     |   |           | Arizona    |  |  |       |           |          
|                                            |       |  |   | properties |           |  | properties |   |           | properties |  |  | Total
|                                            |       |  |   |            |           |  |            |   |           |            |  |  |      
|                                            | Total |  |   |            | 5,180,559 |  |            |   |           | 5,190,612  |  |  |       |           | 5,134,072 |  |  |   |           | 15,505,243
|Less cumulative allocation to cost of sales |       |  |   | 3,681,423  |           |  |            |   | 1,124,957 |            |  |  |       | 1,377,348 |           |  |  |   | 6,183,728 |           
|                                            |       |  |   |            |           |  |            |   |           |            |  |  |       |           |           |  |  |   |           |           
|                                            |       |  | $ | 1,499,136  |           |  |            | $ | 4,065,655 |            |  |  | $     | 3,756,724 |           |  |  | $ | 9,321,515 |           
|                                            |       |  |   |            |           |  |            |   |           |            |  |  |       |           |           |  |  |   |           |           

The above summary includes only properties with remaining unsold land.
Properties are deleted when 100% developed and sold.

NOTE D - RELATED ENTITIES

Related entity receivables/payables are as follows at September 30, 2003:

|                                  |                                                             |   |         |         | 
|--------------------------------- | ----------------------------------------------------------- | - | ------- | ------- | 
|Receivable from related entities:
|                                  | Management Pool, LLC                                        |   | $       | 43,244  | 
|                                  | Minority investor in Houston Warren Ranch
Partners, LLC (3) |   |         | 16,625  | 
|                                  | Other                                                       |   |         | 8,211   | 
|                                  |                                                             |   |         |        
|                                  |                                                             | $ | 68,080  |        
|                                  |                                                             |   |         |        
|Payable to related entities:      |                                                             |   |         |        
|                                  | Minority investors in Glendale Condominiums, LLC (2)        |   | $       | 710,885 | 
|                                  | Lafayette Financial Services (1)                            |   |         | 34,542  | 
|                                  |                                                             |   |         |        
|                                  |                                                             | $ | 745,427 |        
|                                  |                                                             |   |         |        

The subordinated debt is also due to a related entity. See Note H for further
discussion.



|(1) |  | Lafayette Financial Services (Lafayette) is 50% owned by the Chairman
of the Companys Board of Directors. This note resulted from the purchase
of certain real estate options by the Company in 1999. The note bears
interest at prime and is payable in semi-annual installments of $15,760
plus interest.                                                                                                                                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Company has a 70% interest in Glendale Condominiums, LLC. The land
for the project was purchased from an individual and a trust who own the
other 30% of the project. The payable represents the balance due,
including interest at 8% per annum, for this purchase. Principal and
interest are due quarterly from September 2008 through September 2018. The
land cost and preliminary development costs for this project total
$2,379,178 at September 30, 2003 and are included in land held for
development and sale in Arizona properties.
|   
|(3) |  | The Company has a 55% interest in Houston Warren Ranch Partners, LLC,
with Jessica Star Partners, LLC owning the remaining 45%. Jessica Star
Partners, LLC is 33% owned by the Chairman of the Companys Board of
Directors. The note receivable bears interest at 10%, with principal and
interest due on September 24, 2004.                                                                                                                                                                                                                     

NOTE E  INVESTMENT IN UNCONSOLIDATED COMPANY

On September 19, 1997, Laguna Investments L.L.C. (Laguna Investments), a
subsidiary of the Company, acquired a 25.52% ownership in Laguna at Arrowhead
Apartments L.L.C. (Laguna), which owns an apartment complex in Phoenix,
Arizona. On December 30, 2002, the Company sold a 7.1% interest in Laguna
Investments to Lafayette for $35,500 in partial payment of the note payable to
Lafayette (see Note D). Lafayette is 50% owned by the Chairman of the
Companys Board of Directors. On September 29, 2003, the Company sold an
additional 6.37% interest in Laguna Investments to Lafayette for $31,855, also
in partial payment of the note payable to Lafayette. On September 29, 2003,
the Company also sold a 3.0% interest in Laguna Investments to Torok Partners,
LLC for $15,000 in exchange for Torok Partners minority interest in one of the
Companys projects. Torok Partners is controlled by the Chairman of the
Companys Board of Directors. As a result of these transactions, at September
30, 2003 the Company owns 83.53% of Laguna Investments, which represents a
21.32% interest in Laguna.

This investment in Laguna is accounted for using the equity method. Under the equity
method, the Companys investment balance approximates the Companys original
cost adjusted for its equity interest in the earnings and losses of Laguna
since the date of acquisition. At September 30, 2003 the Companys investment
balance in Laguna was $-0-. Under the terms of the Laguna at Arrowhead
Apartments

F-11



---



##### Table of Contents



L.L.C. operating agreement, Laguna Investments L.L.C. is subject to additional
capital calls in connection with its ownership interest in Laguna. Laguna
Investments L.L.C. was notified of a capital call for $53,530, which was paid
in 2003. As a result of this payment, unrecognized equity losses from prior
periods were recorded in the nine months ended September 30, 2003 to the extent
of the capital call. Unrecognized losses from Laguna as of September 30, 2003
total $187,480. Had Laguna Investments L.L.C. failed to make the required
payment, its ownership interest would have been reduced from 25.52% to 24.14%.

Summarized unaudited financial information for Laguna is as follows:

|                       |              |   |               |           | 
|---------------------- | ------------ | - | ------------- | --------- | 
|                       |              |   | September 30,
|                       |              |   | 2003         
|                       |              |   |              
|Current assets         |              | $ | 129,420       |          
|Noncurrent assets      |              |   | 8,414,240     |          
|                       |              |   |               |          
|                       | Total assets |   | $             | 8,543,660 | 
|                       |              |   |               |          
|Current liabilities    |              | $ | 165,788       |          
|Noncurrent liabilities |              |   | 9,241,761     |          
|Members capital       |              |   | (863,889      | )        
|                       |              |   |               |          
|                       |              | $ | 8,543,660     |          
|                       |              |   |               |          

|                                                 |  |               |           |              |  |   |           |  
|------------------------------------------------ |  | ------------- | --------- | ------------ |  | - | --------- | -
|                                                 |  | Nine months   |           |              |  |  
|                                                 |  | ended         |           | Year ended  
|                                                 |  | September 30, |           | December 31,
|                                                 |  | 2003          |           | 2002        
|                                                 |  |               |           |             
|Revenues                                         |  | $             | 1,132,145 |              |  | $ | 1,427,609 |  
|Net loss from continuing
operations
and net loss |  |               | (368,907  | )            |  |   | (612,339  | )

NOTE F  OTHER ASSETS

Other assets consist of the following as of September 30, 2003:

|                                                          |  |   |         | 
|--------------------------------------------------------- |  | - | ------- | 
|Financing reserve receivable, net of allowance
of $27,608 |  | $ | 172,722 | 
|Deposits (1)                                              |  |   | 525,000 | 
|Receivables from title companies                          |  |   | 169,308 | 
|Marketable securities                                     |  |   | 114     | 
|Prepaid expenses, advances and other                      |  |   | 105,823 | 
|Deferred tax asset                                        |  |   | 12,079  | 
|                                                          |  |   |         | 
|                                                          |  | $ | 985,046 | 
|                                                          |  |   |         | 



|(1) |  | Effective July 8, 2003, in exchange for a $650,000 note payable, the
Company acquired land in Stafford, Texas for $125,000 and also agreed
to become general partner and to
acquire a 34% interest in #22 Stafford Springs LTD (Stafford Springs) for $525,000. Stafford Springs owns the Summer
Park Duplexes, a 168-unit, HUD-financed, manufactured housing duplex
rental community in Stafford, Texas. The $525,000 paid for Stafford
Springs has been accounted for as a deposit pending receipt of final
approval of this transaction by HUD. As of September 30, 2003, HUD
approval had not yet been received. In September 2003, the seller of the
ownership interest needed to generate cash to fund an unrelated
development project, and agreed to accept a discount in exchange for an
early payoff of the $650,000 note. As a result, this note was paid off on
September 29, 2003 at a discount of $260,000. The Chairman of the
Companys board of directors also owns 33% of Stafford Springs.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE G  NOTES PAYABLE

Notes payable consist of the following at September 30, 2003:

F-12



---



##### Table of Contents



|                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- | 
|Houston, Texas Properties                                                                                                                                                                                                                                                                                                                                                                                                       |  |   |           | 
|Notes payable to various financial institutions bearing interest at 3%
over prime. The interest payments are due monthly or quarterly and
the loans have maturity dates through April, 2004. The interest
rate was 7.0% at September 30, 2003. Minimum
principal payments are required quarterly on certain loans,
but principal reductions are primarily made as developed
lots are sold - collateralized by Texas real estate |  | $ | 502,881   | 
|New Mexico Ranch Properties                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|Notes payable to financial institution, bearing interest at variable rates
of 4% over annualized average weekly yield of U.S. Treasury securities,
adjusted annually ( 5.23% to 6.33% at September, 2003)
Payments of $38,966 including principal and interest are
due quarterly through June 23, 2004 - collateralized by New Mexico real
estate                                                                               |  |   | 1,825,120 | 
|Note payable to a finance company, with monthly principal and interest
payments of $2,466, bearing interest at 11%, due September 1, 2017 -
collateralized by New Mexico real estate                                                                                                                                                                                                                                            |  |   | 211,553   | 
|Note payable to a corporation, with monthly principal and interest
payments of $2,038, bearing interest at 11%, due April 1, 2006 -
collateralized by New Mexico real estate                                                                                                                                                                                                                                                    |  |   | 56,298    | 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 6,666     | 
|Arizona Ranch Properties                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |           | 
|Note payable to financial institution, bearing interest at variable rate of
4% over LIBOR, adjusted annually (6.5% at September 30, 2003),
Interest payments of $14,010 are due quarterly with principal
reductions made as lots are sold, remaining balance due January 2,
2007 - collateralized by Arizona real estate                                                                                                        |  |   | 782,893   | 
|Other Arizona Properties                                                                                                                                                                                                                                                                                                                                                                                                        |  |   |           | 
|Notes payable to financial institution for construction of a condominium
complex, bearing interest at variable rates of 1.5% to 2.0% over prime with a
7.0% floor (7.0% at September 30, 2003). Interest payments are due monthly,
with principal reductions made as condominiums are sold, remaining
balance due September 25, 2004 - collateralized by Arizona real estate                                                    |  |   | 612,250   | 
|Other                                                                                                                                                                                                                                                                                                                                                                                                                           |  |   | 28,927    | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |           | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                |  | $ | 4,026,588 | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                |  |   |           | 

|                                                              |  |   |           | 
|------------------------------------------------------------- |  | - | --------- | 
|Maturities for notes payable as of September 30, 2003 follow: |  |   |           | 
|2004                                                          |  | $ | 2,973,947 | 
|2005                                                          |  |   | 35,120    | 
|2006                                                          |  |   | 28,521    | 
|2007                                                          |  |   | 799,215   | 
|2008                                                          |  |   | 15,708    | 
|Thereafter                                                    |  |   | 174,077   | 
|                                                              |  |   |           | 
|                                                              |  | $ | 4,026,588 | 
|                                                              |  |   |           | 

NOTE H - SUBORDINATED DEBT

The Companys operations have been partially financed with periodic advances in
prior years from Amortibanc Investments, L.C. The advances are subordinate to
the Companys bank financing and bear interest at 8% to 10%. The interest
accrued on these

F-13



---



##### Table of Contents



advances has primarily been added to the subordinated debt. Payments on the
debt are made only when cash flow from a land sale, after payment of bank debt,
exceeds the Companys operating cash requirements. This determination is made
by the Companys management. The total advances and accrued interest due is
$3,319,684 at September 30, 2003.

Subordinated debt of $293,106 and $809,195 was converted to equity in the
Company by Amortibanc Investments, L.C. effective September 29, 2003 and June
29, 2002, respectively.

NOTE I - OPERATING LEASES

The Company leases office space, vehicles and equipment under operating leases.
Future minimum lease payments under these agreements are as follows:

|                          |      |  |   |         | 
|------------------------- | ---- |  | - | ------- | 
|Year ending September 30, |      |  |   |        
|                          | 2004 |  | $ | 100,382 | 
|                          | 2005 |  |   | 4,766   | 

Total rent expense was $90,673 and $117,502 for the nine months ended September
30, 2003 and the year ended December 31, 2002, respectively.

NOTE J - PROFIT-SHARING RETIREMENT PLAN

The Company maintains a 401(k) profit-sharing plan for the benefits of its
eligible employees. The Company makes a matching contribution equal to 100% of
each participants eligible contributions to a maximum of 3% of each
participants compensation. The Company can also make a discretionary
contribution determined annually by the Board of Directors. Contribution
expense incurred by the Company was $9,683 and $10,667 for the nine months
ended September 30, 2003 and the year ended December 31, 2002, respectively.

NOTE K - COMMITMENTS AND CONTINGENCIES

The Company has sold notes receivable with repayment terms of up to 15 years,
with recourse upon nonpayment by the debtor of $383,968 during the nine months
ended September 30, 2003 and $487,404 during the year ended December 31, 2002.
The remaining balances due, with recourse, of all notes sold are
$1,157,023 as
of September 30, 2003.

Fifteen percent of the note sales proceeds are retained by the
purchaser of the notes as a nonpayment reserve and returned to the Company when
the original land purchasers pay off the note balances. The reserve balance is
$200,330 at September 30, 2003 and is included in other assets, net of an
allowance established for recourse chargeback of $27,608. If the Company
incurs a chargeback, ownership of the original land sold will revert to the
Company and can be resold to help recover any losses incurred by the Company as
a result of the chargeback. During the nine months ended September 30, 2003,
the Company received two chargebacks totaling $61,600.

From time-to-time the Company is involved in litigation arising in the normal
course of business. Based on information currently available, management does
not believe that the ultimate resolution of any such matters will have a
material adverse effect on the Companys financial condition, results of
operations or cash flow.

The Company entered into a five-year employment agreement with its president
during 2001. In the event the Company consummates an acquisition (as defined
in the agreement) during the terms of the agreement, the contract provides for
salary increases and issuance of options to acquire a total of 600,000 common
shares of the surviving corporation at a price not to exceed the fair market
value of such shares on the closing date of the acquisition. The agreement
also provides for severance payments upon termination in the amount of the
total compensation for the remainder of the contract terms and a consulting
arrangement upon retirement of the president.

NOTE L - PREFERRED STOCK

F-14



---



##### Table of Contents



The company has outstanding 14,380 shares of Series A Cumulative Convertible
Preferred Stock, with a liquidation value of $719,000. The preferred stock is
not redeemable at a fixed or determinable price or on a fixed or determinable
date or upon the occurrence of any event that is not solely within the
Companys control. The preferred stock is convertible by the holder at any
time into shares of the Companys common stock at a price equal to the average
market price of the Companys common stock for the thirty business days
immediately preceding the conversion, and is redeemable by the Company at any
time after one year from the date of issuance. Since no public market
currently exists for the Companys common stock, market price is determined by
the Board of Directors. The preferred stock has a cumulative dividend, payable
semi-annually at the following rates:

|                                      |  |             
|------------------------------------- |  | ------------
|First year from the date of issuance  |  | 0% per annum
|Second year from the date of issuance |  | 2% per annum
|Third year from the date of issuance  |  | 4% per annum
|Fourth year from the date of issuance |  | 5% per annum
|Fifth year from the date of issuance  |  | 6% per annum
|Thereafter                            |  | 7% per annum

As the preferred stock has an increasing dividend rate, the preferred stock was
initially recorded at its fair value at the date of its issuance by discounting
the preferred stock using managements estimate of the current market rate for
dividend yields and comparing it to the actual dividend rate of the preferred
stock. This resulted in a discount of $114,071, which was recorded as
additional paid in capital as the transaction was between the Company and its
sole stockholder. This discount will be amortized over the period of
increasing dividend rates of the preferred stock. Amortization was $31,850 and
$23,630 for the nine months ended September 30, 2003 and the year ended
December 31, 2002, respectively.

NOTE M - STOCK OPTION PLAN

The Company has established a 2001 stock option plan and has reserved 3,500,000
shares to be issued under the plan. All employees are eligible to participate
in this plan and participants shall be selected by an Administrative Committee
consisting of not less than three members of the Companys Board of Directors.
The options generally vest over a period of 3 years, however certain options
granted to employees who have been with the Company for over five years vest
immediately. The options expire no more than 10 years from the date of grant.
Upon termination of an option holders employment, all unvested options will
immediately terminate and vested options will generally remain exercisable for
a period of three months after date of termination (one year in case of
disability or death). The options issued in 2002 and 2003 were at an exercise
price of $0.15 per share, which approximates the fair market value of the
Companys common stock. Since no public market exists for the Companys
common stock, fair market value is determined by the Board of Directors. At
September 30, 2003 options for 1,456,250 shares of common stock were available
for issuance under the plan.

Additional information with respect to stock option plan activity is as
follows:

|                  |               |  |                     |           |          |   |          |      | 
|----------------- | ------------- |  | ------------------- | --------- | -------- | - | -------- | ---- | 
|                  |               |  | Outstanding Options
|                  |               |  |                    
|                  |               |  |                     |           |          |   | Weighted
|                  |               |  | Number              |           | Average 
|                  |               |  | of                  |           | Exercise
|                  |               |  | Shares              |           | Price   
|                  |               |  |                     |           |         
|January 1, 2002   |               |  | 93,750              |           |          | $ | 0.80     |     
|                  | Grants        |  |                     | 1,950,000 |          |   |          | 0.15 | 
|                  | Cancellations |  |                     | (200,000  | )        |   |          | 0.15 | 
|                  |               |  |                     |           |          |   |          |     
|December 31, 2002 |               |  | 1,843,750           |           |          |   | 0.18     |     
|                  | Grants        |  |                     | 200,000   |          |   |          | 0.15 | 
|                  | Cancellations |  |                     |          |          |   |          |      | 
|                  |               |  |                     |           |          |   |          |     
|December 31, 2003 |               |  | 2,043,750           |           |          | $ | 0.18     |     
|                  |               |  |                     |           |          |   |          |     

Outstanding options expire at various dates through July 2013. Options
outstanding and options exercisable at September 30, 2003 are as follows:

F-15



---



##### Table of Contents



|         |  |                     |           |                     |  |          |     |                 |  |  |           |          |  |  |     | 
|-------- |  | ------------------- | --------- | ------------------- |  | -------- | --- | --------------- |  |  | --------- | -------- |  |  | --- | 
|         |  | Outstanding Options |           | Exercisable Options
|         |  |                     |           |                    
|         |  |                     |           |                     |  | Weighted |     |                 |  |  |           | Weighted
|         |  | Number              |           | Average             |  | Number   |     | Average        
|Exercise |  | of                  |           | Contractual         |  | of       |     | Contractual    
|Prices   |  | Shares              |           | Life (in years)     |  | Shares   |     | Life (in years)
|         |  |                     |           |                     |  |          |     |                
|$0.15    |  |                     | 1,950,000 |                     |  |          | 8.5 |                 |  |  | 1,566,667 |          |  |  | 8.4 | 
|$0.80    |  |                     | 93,750    |                     |  |          | 6.1 |                 |  |  | 93,750    |          |  |  | 6.1 | 
|         |  |                     |           |                     |  |          |     |                 |  |  |           |          |  |  |     | 
|         |  |                     | 2,043,750 |                     |  |          |     |                 |  |  | 1,660,417 |          |  |  |     | 
|         |  |                     |           |                     |  |          |     |                 |  |  |           |          |  |  |     | 

The Company accounts for this plan under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employeesand
related Interpretations using the intrinsic value based method. No stock-based
employee compensation cost is reflected in net earnings, as all options granted
under this plan had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table illustrates
the effect on net earnings and earnings per share if the Company had applied
the fair value recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation for the nine
months ended September 30, 2003 and the year ended December 31, 2002.

|                                                                                                     |                                 |   |               |   |              |   |         |   | 
|---------------------------------------------------------------------------------------------------- | ------------------------------- | - | ------------- | - | ------------ | - | ------- | - | 
|                                                                                                     |                                 |   | Nine months   |   |              |   |        
|                                                                                                     |                                 |   | ended         |   | Year ended  
|                                                                                                     |                                 |   | September 30, |   | December 31,
|                                                                                                     |                                 |   | 2003          |   | 2002        
|                                                                                                     |                                 |   |               |   |             
|Net earnings, as reported                                                                            |                                 | $ | 15,185        |   |              | $ | 13,863  |  
|Deduct: Total stock-based employee compensation expense
determined under fair value based method (1) |                                 |   | (9,967        | ) |              |   | (89,795 | )
|                                                                                                     |                                 |   |               |   |              |   |         |  
|Pro forma net earnings (loss)                                                                        |                                 | $ | 5,218         |   |              | $ | (75,932 | )
|                                                                                                     |                                 |   |               |   |              |   |         |  
|Net earnings (loss) per share:                                                                       |                                 |   |               |   |              |   |         |  
|                                                                                                     | Basic and diluted - as reported |   | $             |  |              |   | $       |  | 
|                                                                                                     |                                 |   |               |   |              |   |         |  
|                                                                                                     | Basic and diluted - pro forma   |   | $             |  |              |   | $       |  | 
|                                                                                                     |                                 |   |               |   |              |   |         |  



|(1) |  | The fair value method amortizes the estimated fair value of the options
at date of grant over the vesting period. The fair value of these options
was estimated at the date of grant assuming a risk-free interest rate of
4.88%, an expected option life of 10 years with no volatility or
dividends. Such life is based on all options being exercised just prior
to expiration.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE N - INCOME TAXES

The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are as follows at September 30, 2003 and December 31, 2002:

|                       |                                        |   |               |         |              |   |        |         |  
|---------------------- | -------------------------------------- | - | ------------- | ------- | ------------ | - | ------ | ------- | -
|                       |                                        |   | September 30, |         | December 31,
|                       |                                        |   | 2003          |         | 2002        
|                       |                                        |   |               |         |             
|Deferred tax assets    |                                        |   |               |         |              |   |        |        
|                       | Allowance for doubtful accounts        |   | $             | 11,043  |              |   | $      | 22,261  |  
|                       | Expense attributable to related entity |   |               | 24,042  |              |   |        | 24,042  |  
|                       |                                        |   |               |         |              |   |        |        
|                       |                                        |   | 35,085        |         |              |   | 46,303 |        
|                       | Less valuation allowance               |   |               | (15,950 | )            |   |        | (16,808 | )
|                       |                                        |   |               |         |              |   |        |        
|                       |                                        |   | 19,135        |         |              |   | 29,495 |        
|Deferred tax liability |                                        |   |               |         |              |   |        |        
|                       | Depreciation of property and equipment |   |               | 7,056   |              |   |        | 16,558  |  
|                       |                                        |   |               |         |              |   |        |         |  
|                       |                                        | $ | 12,079        |         |              | $ | 12,937 |        
|                       |                                        |   |               |         |              |   |        |        

F-16



---



##### Table of Contents



The Company established a valuation allowance of $15,950 at September 30, 2003
against the deferred tax assets whose realization is dependent on future
taxable income. The valuation allowance decreased in 2003 by $858 due to
managements reevaluation of the deferred tax assets.

Income tax expense is comprised of the following:

|                               |                    |   |               |   |              |   |         |   | 
|------------------------------ | ------------------ | - | ------------- | - | ------------ | - | ------- | - | 
|                               |                    |   | Nine months   |   |              |   |        
|                               |                    |   | ended         |   | Year ended  
|                               |                    |   | September 30, |   | December 31,
|                               |                    |   | 2003          |   | 2002        
|                               |                    |   |               |   |             
|Currently payable (receivable) |                    | $ | (858          | ) |              | $ | 12,937  |  
|Deferred tax expense (benefit) |                    |   | 858           |   |              |   | (12,937 | )
|                               |                    |   |               |   |              |   |         |  
|                               | Income tax expense |   | $             |  |              |   | $       |  | 
|                               |                    |   |               |   |              |   |         |  

A reconciliation of income taxes computed at the federal statutory rate of
34% to income tax expense is as follows:

|                                              |  |               |        |              |  |   |        |  
|--------------------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | -
|                                              |  | Nine months   |        |              |  |  
|                                              |  | ended         |        | Year ended  
|                                              |  | September 30, |        | December 31,
|                                              |  | 2003          |        | 2002        
|                                              |  |               |        |             
|Income taxes at statutory rate                |  | $             | 5,163  |              |  | $ | 4,713  |  
|Decrease in deferred tax valuation allowance  |  |               | (858   | )            |  |   |       |  
|Difference due to progressive statutory rates |  |               | (2,885 | )            |  |   | (2,634 | )
|Other                                         |  |               | (1,420 | )            |  |   | (2,079 | )
|                                              |  |               |        |              |  |   |        |  
|                                              |  | $             |       |              |  | $ |       |  
|                                              |  |               |        |              |  |   |        |  

NOTE O  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Consolidated quarterly financial information is as follows:

|                                                           |  |                                      |          |        |  |        |         |  |  |   |         | 
|---------------------------------------------------------- |  | ------------------------------------ | -------- | ------ |  | ------ | ------- |  |  | - | ------- | 
|                                                           |  | Nine months ended September 30, 2003
|                                                           |  |                                     
|Quarter ended                                              |  | Mar 31                               |          | Jun 30 |  | Sep 30
|                                                           |  |                                      |          |        |  |       
|Revenue                                                    |  | $                                    | 694,590  |        |  | $      | 879,587 |  |  | $ | 688,879 | 
|Operating income (loss)                                    |  |                                      | (197,111 | )      |  |        | 121,421 |  |  |   | 43,485  | 
|Net earnings (loss)                                        |  |                                      | (403,007 | )      |  |        | 76,553  |  |  |   | 341,639 | 
|Net earnings (loss) per common
and common equivalent share |  | $                                    | (0.02    | )      |  | $      |        |  |  | $ | 0.02    | 

|                                                           |  |                              |          |        |  |        |           |        |  |   |          |   |  |   |           | 
|---------------------------------------------------------- |  | ---------------------------- | -------- | ------ |  | ------ | --------- | ------ |  | - | -------- | - |  | - | --------- | 
|                                                           |  | Year ended December 31, 2002
|                                                           |  |                             
|Quarter ended                                              |  | Mar 31                       |          | Jun 30 |  | Sep 30 |           | Dec 31
|                                                           |  |                              |          |        |  |        |           |       
|Revenue                                                    |  | $                            | 934,068  |        |  | $      | 1,081,091 |        |  | $ | 803,214  |   |  | $ | 1,237,203 | 
|Operating income (loss)                                    |  |                              | (114,227 | )      |  |        | 49,948    |        |  |   | (193,040 | ) |  |   | 216,844   | 
|Net earnings (loss)                                        |  |                              | (294,612 | )      |  |        | (8,702    | )      |  |   | (260,527 | ) |  |   | 577,704   | 
|Net earnings (loss) per common
and common equivalent share |  | $                            | (0.01    | )      |  | $      |          |        |  | $ | (0.01    | ) |  | $ | 0.02      | 

NOTE P SETTLEMENT OF QUEPASA.COM CLAIM

The Company entered into a merger agreement with quepasa.com as of August 6,
2001. In October 2001, in order to induce the Company to amend and extend the
original merger agreement, quepasa.com loaned the Company $500,000 (the
loan). In February 2002, the merger agreement was terminated. The merger
agreement provided for a termination fee of $500,000 as liquidated damages

F-17



---



##### Table of Contents



under certain circumstances. The Company believed that it was entitled to this
termination fee, which would result in the loan being deemed paid in full and
filed a declaratory judgment action against quepasa.com on that issue.
Quepasa.com filed a counterclaim, alleging that it was entitled to the
termination fee and seeking to foreclose on the loan. This lawsuit was settled
in October 2002. Under the terms of the settlement, the Company retained the
termination fee, which resulted in the loan being deemed paid in full, in
exchange for a payment by the Company to quepasa.com of $50,000 and the
transfer to quepasa.com of 642,000 shares of quepasa.com common stock with a
market value of $44,250. The net result was that the Company recognized a gain
on the settlement of the claim against quepasa.com of $405,750 during the year
ended December 31, 2002.

NOTE Q  RELATED PARTY TRANSACTIONS

Prior to March 1, 2003, the Company owned an 85% interest in Willow Springs
Ranch, LLC, with several minority investors owning the remaining 15%. The
minority investors included, among others, Lafayette Financial Services (a
company that is 50% owned by the Chairman of the Companys board of directors)
and another partnership controlled by the Chairman. On March 1, 2003, the
Company bought out the minority investors interest in exchange for 640 acres
of Arizona ranch land and cancellation of a $134,962 payable.

Effective July 8, 2003, in exchange for a $650,000 note payable, the Company
acquired land in Stafford, Texas for $125,000 and also agreed to
become general partner and acquire a 34%
interest in #22 Stafford Springs LTD (Stafford Springs) for $525,000. Stafford Springs owns the Summer Park Duplexes, a
168-unit, HUD-financed, manufactured housing duplex rental community in
Stafford, Texas. The $525,000 paid for Stafford Spring is a deposit pending
receipt of final approval of this transaction by HUD (see Note F). As of
September 30, 2003, HUD approval had not yet been received. This note was paid
off on September 29, 2003 at a discount of $260,000. The Chairman of the
Companys board of directors also owns 33% of Stafford Springs.

On September 19, 1997, Laguna Investments L.L.C. (Laguna Investments), a
subsidiary of the Company, acquired a 25.52% ownership in Laguna at Arrowhead
Apartments L.L.C. (Laguna), which owns an apartment complex in Phoenix,
Arizona. On December 30, 2002, the Company sold a 7.1% interest in Laguna
Investments to Lafayette for $35,500 in partial payment of the note payable to
Lafayette (see Note D). Lafayette is 50% owned by the Chairman of the
Companys Board of Directors. On September 29, 2003, the Company sold an
additional 6.37% interest in Laguna Investments to Lafayette for $31,855, also
in partial payment of the note payable to Lafayette. On September 29, 2003,
the Company also sold a 3.0% interest in Laguna Investments to Torok Partners,
LLC for $15,000 in exchange for Torok Partners minority interest in one of the
Companys projects. Torok Partners is controlled by the Chairman of the
Companys Board of Directors. As a result of these transactions, at September
30, 2003 the Company owns 83.53% of Laguna Investments, which represents a
21.32% interest in Laguna (see Note E).

NOTE R  CHANGE IN FISCAL YEAR

On June 4, 2003 the Company changed its year-end from December 31 to September
30. As a result of this change, fiscal 2003 was a short year, which ended on
September 30, 2003 and consisted of only nine months. Comparable consolidated
information regarding the Companys results of operations and cash flows for
the nine months ended September 30, 2003 and 2002 follows (unaudited):

|                                                       |                                            |   |                                 |           |      |   |           |           |  
|------------------------------------------------------ | ------------------------------------------ | - | ------------------------------- | --------- | ---- | - | --------- | --------- | -
|                                                       |                                            |   | Nine months ended September 30,
|                                                       |                                            |   |                                
|                                                       |                                            |   | 2003                            |           | 2002
|                                                       |                                            |   |                                 |           |     
|Land and lot sales                                     |                                            | $ | 2,263,056                       |           |      | $ | 2,818,373 |          
|Cost of land and lot sales                             |                                            |   | 1,182,336                       |           |      |   | 1,203,876 |          
|                                                       |                                            |   |                                 |           |      |   |           |          
|                                                       | Gross profit on sales                      |   |                                 | 1,080,720 |      |   |           | 1,614,497 |  
|Operating, selling, general and
administrative expense |                                            |   | 1,112,925                       |           |      |   | 1,871,816 |          
|                                                       |                                            |   |                                 |           |      |   |           |          
|                                                       |                                            |   | (32,205                         | )         |      |   | (257,319  | )        
|Other income (expense)                                 |                                            |   |                                 |           |      |   |           |          
|                                                       | Interest expense                           |   |                                 | (382,953  | )    |   |           | (567,148  | )
|                                                       | Interest income                            |   |                                 | 112,891   |      |   |           | 143,014   |  
|                                                       | Equity in losses of unconsolidated company |   |                                 | (53,530   | )    |   |           |          |  
|                                                       | Gain on settlement of note payable         |   |                                 | 260,000   |      |   |           |          |  
|                                                       | Other income                               |   |                                 | 111,814   |      |   |           | 118,453   |  
|                                                       |                                            |   |                                 |           |      |   |           |          
|                                                       |                                            |   | 48,222                          |           |      |   | (305,681  | )        
|                                                       |                                            |   |                                 |           |      |   |           |          

F-18



---



##### Table of Contents



|                                                                 |                     |  |                                 |            |      |  |          |            |  
|---------------------------------------------------------------- | ------------------- |  | ------------------------------- | ---------- | ---- |  | -------- | ---------- | -
|                                                                 |                     |  | Nine months ended September 30,
|                                                                 |                     |  |                                
|                                                                 |                     |  | 2003                            |            | 2002
|                                                                 |                     |  |                                 |            |     
|Earnings (loss) before minority interest                         |                     |  | 16,017                          |            |      |  | (563,000 | )         
|Minority interest                                                |                     |  | (832                            | )          |      |  | (841     | )         
|                                                                 |                     |  |                                 |            |      |  |          |           
|                                                                 | Net earnings (loss) |  | $                               | 15,185     |      |  | $        | (563,841   | )
|                                                                 |                     |  |                                 |            |      |  |          |           
|Net earnings (loss) per common and common
equivalent share       |                     |  |                                 |            |      |  |          |           
|                                                                 | Basic and diluted   |  | $                               |           |      |  | $        | (0.03      | )
|                                                                 |                     |  |                                 |            |      |  |          |           
|Weighted average common and common
equivalent shares outstanding |                     |  |                                 |            |      |  |          |           
|                                                                 | Basic and diluted   |  |                                 | 20,781,965 |      |  |          | 20,781,965 |  
|                                                                 |                     |  |                                 |            |      |  |          |           

|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |            |          |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------- | --------- | ------------------------------- | ------- | ---- | ------- | ---------- | -------- | -
|                                                 |                                                                                                      |                                                     |           | Nine months ended September 30,
|                                                 |                                                                                                      |                                                     |           |                                
|                                                 |                                                                                                      |                                                     |           | 2003                            |         | 2002
|                                                 |                                                                                                      |                                                     |           |                                 |         |     
|Cash flows from operating activities             |                                                                                                      |                                                     |           |                                 |         |      |         |           
|                                                 | Net earnings (loss)                                                                                  |                                                     | $         | 15,185                          |         |      | $       | (563,841   | )       
|                                                 | Adjustments to reconcile net earnings (loss) to net cash provided
by (used in ) operating activities |                                                     |           | 1,646,396                       |         |      |         | 1,124,417  |         
|                                                 | Change in assets and liabilities                                                                     |                                                     |           | (1,252,001                      | )       |      |         | (688,183   | )       
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |            |         
|                                                 |                                                                                                      | Net cash provided by (used in) operating activities |           |                                 | 409,580 |      |         |            | (127,607 | )
|Cash flows from investing activities             |                                                                                                      |                                                     |           |                                 |         |      |         |           
|                                                 | Increase (decrease) in advances to/from related parties                                              |                                                     |           | 46,628                          |         |      |         | (139,073   | )       
|                                                 | Investment in unconsolidated company                                                                 |                                                     |           | (53,530                         | )       |      |         |           |         
|                                                 | Proceeds from sale of property and equipment                                                         |                                                     |           | 11,577                          |         |      |         |           |         
|                                                 | Purchase of property and equipment                                                                   |                                                     |           | (47,215                         | )       |      |         | (45,366    | )       
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |            |         
|                                                 |                                                                                                      | Net cash used in investing activities               |           |                                 | (42,540 | )    |         |            | (184,439 | )
|Cash flows from financing activities             |                                                                                                      |                                                     |           |                                 |         |      |         |           
|                                                 | Issuance of notes payable                                                                            |                                                     |           | 1,368,549                       |         |      |         | 3,697,665  |         
|                                                 | Payments on notes payable                                                                            |                                                     |           | (1,289,114                      | )       |      |         | (2,816,023 | )       
|                                                 | Decrease in subordinated debt                                                                        |                                                     |           |                                |         |      |         | (431,747   | )       
|                                                 | Minority investment in consolidated subsidiary                                                       |                                                     |           |                                |         |      |         | 45,000     |         
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |           
|                                                 |                                                                                                      | Net cash provided by financing activities           |           |                                 | 79,435  |      |         |            | 494,895  |  
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |           
|                                                 | Net increase in cash and cash equivalents                                                            |                                                     |           | 446,475                         |         |      |         | 182,849    |         
|Cash and cash equivalents at beginning of period |                                                                                                      |                                                     | 654,369   |                                 |         |      | 317,969 |           
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |            |         
|Cash and cash equivalents at end of period       |                                                                                                      | $                                                   | 1,100,844 |                                 |         | $    | 500,818 |           
|                                                 |                                                                                                      |                                                     |           |                                 |         |      |         |            |         

NOTE S  RECENT ACCOUNTING PRONOUNCEMENTS

In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure 
An Amendment of FASB Statement 123 (SFAS 123). For entities that change
their accounting for stock-based compensation from the intrinsic method to the
fair value method under SFAS 123, the fair value method is to be applied
prospectively to those awards granted after the beginning of the period of
adoption (prospective method). The amendment permits two additional
transition methods for adoption of the fair value method. In addition to the
prospective method, the entity can choose to either (i) restate all periods
presented (retroactive restatement method) or (ii) recognize compensation
cost

F-19



---



##### Table of Contents



from the beginning of the fiscal year of adoption as if the fair value method
had been used to account for awards (modified prospective method). For
fiscal years beginning December 15, 2003, the prospective method will no longer
be allowed. The Company currently accounts for its stock-based compensation
using the intrinsic value method as proscribed by Accounting Principals Board
Option No. 25, Accounting for Stock issued to Employees and plans on
continuing using this method to account for stock options, therefore, it does
not intend to adopt the transition requirements as specified in SFAS 148. The
Company has adopted the new SFAS 148 disclosure requirement of SFAS 148 in
these financial statements.

The FASB issued Interpretation (FIN) No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, in November 2002 and FIN No. 46, Consolidations of
Variable Interest Entities, in January 2003. FIN No. 45 is applicable on a
prospective basis for initial recognition and measurement provisions to
guarantees issued after December 2003; however, disclosure requirements are
effective immediately. FIN No. 45 requires a guarantor to recognize, at the
inception of a guarantee, a liability for the fair value of the obligations
undertaken in issuing the guarantee and expands the required disclosures to be
made by the guarantor about its obligation under certain guarantees that it has
issued. The adoption of FIN No. 45 did not have a material impact on the
Companys financial position or results of operations. FIN No. 46 requires
that a company that controls another entity through interest other than voting
interest should consolidate such controlled entity in all cases for interim
periods beginning after June 15, 2003. The adoption of FIN No. 46 did not have
a material impact on its financial position or results of operations.

F-20



---



##### Table of Contents






2003 10-KSB EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                        
|No.     |  |                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.1    |  | Articles of Incorporation of First National Realty Associates, Inc.
(Incorporated by reference to Exhibit 8 of Registration Statement
on Form S-18 (No. 33-30679-NY))                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.2    |  | Agreement of Merger of First National Realty Associates, Inc. into
Emphatic Mergers (Incorporated by reference to Exhibit 14 of
Registration Statement on Form S-18 (No. 33-30679- NY))                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.3    |  | Agreement and Plan of Merger between 1st Realty Investments, Inc.
and Great Western Land and Recreation, Inc. dated as of July 23,
2002 (Incorporated by reference to Exhibit 1 of Form 8-K filed with
the Commission on July 29, 2002)                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.4    |  | Certificate of Merger of Great Western Land and Recreation, Inc., a
Delaware Corporation with and into 1st Realty Investments, Inc., a
Nevada Corporation                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.5    |  | Great Western Land and Recreation, Inc. Amended and Restated By-Laws                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.6    |  | Certificate of Designations of Series A Cumulative Convertible
Preferred Stock of 1st Realty Investments, Inc. (Incorporated by
reference to Appendix B of Schedule 14C of 1st Realty Investments,
Inc. filed with the Commission on January 27, 2003)                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.7    |  | Investment Agreement dated June 29, 2002 by and between Amortibanc
Investments, L.C. and Great Western Land and Recreation, Inc.                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.8    |  | Great Western Land and Recreation, Inc. Stock Option Plan
(Incorporated by reference to Appendix C of Schedule 14C of 1st
Realty Investments, Inc. filed with the Commission on January 27,
2003)                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.9    |  | Form of Great Western Land and Recreation, Inc. Stock Option
Agreement (Incorporated by reference to Exhibit 4.02 of Form S-4 of
Great Western Land and Recreation, Inc. filed with the Commission
on October 16, 2001)                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.10   |  | Agreement of Sale of Partnership Interest, dated July 8, 2003
between Great Western Land and Recreation, Inc. and Arete Real
Estate and Development Co.                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.11   |  | Sale and Subscription Agreement of Membership Interests in Laguna
Investments L.L.C. dated September 29, 2003 between Great Western
Land and Recreation, Inc. and Torok Partners, L.L.C.                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.12   |  | Sale and Subscription Agreement of Membership Interests in Laguna
Investments L.L.C. dated September 29, 2003 between Great Western
Land and Recreation, Inc. and Lafayette Financial Services, L.L.C.                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.13   |  | Employment Agreement between Great Western land and Recreation,
Inc. and Jay N. Torok dated September 1, 2001 (Incorporated by
reference to Exhibit 10.01 of Form S-4/A of Great Western Land and
Recreation, Inc. filed with the Commission on December 11, 2001)                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.14   |  | Contribution Agreement by and between Great Western Land and
Recreation, Inc., Amortibanc Management, L.C., Amortibanc
Investments, L.C., and GWLR, LLC dated as of August 6, 2001
(Incorporated by reference to Exhibit 10.02 of Form S-4/A of Great
Western Land and Recreation, Inc. filed with the Commission on
December 11, 2001)
|        |  |                                                                                                                                                                                                                                                                                                                                        
|10.15   |  | Promissory Note dated January 3, 2002, by and between GWLR Wagon
Bow Ranch, LLC and Bank Midwest                                                                                                                                                                                                                                       

E-1



---



##### Table of Contents



|        |  |                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                  
|No.     |  |                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                  
|10.16   |  | Secured Promissory Note dated September 25, 2002, between National
Bank of Arizona and Glendale Condominiums, LLC                                                                                                                                
|        |  |                                                                                                                                                                                                                                                  
|10.17   |  | Promissory Note dated September 25, 2002, between National Bank of
Arizona and Glendale Condominiums, LLC                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                  
|10.18   |  | Loan Agreement dated June 23, 2000, by and between Willow Spring
Ranch, LLC and Bank Midwest (Incorporated by reference to Exhibit
10.21 of Form S-4/A of Great Western Land and Recreation, Inc.
filed with the Commission on December 11, 2001)
|        |  |                                                                                                                                                                                                                                                  
|10.19   |  | Great Western Land and Recreation, Inc. Code of Business Ethics                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                  
|11      |  | Statement RE: Computation of per Share Earnings (Loss)                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                  
|21      |  | List of Subsidiaries                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                  
|31.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                            
|        |  |                                                                                                                                                                                                                                                  
|31.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                            
|        |  |                                                                                                                                                                                                                                                  
|32.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                            
|        |  |                                                                                                                                                                                                                                                  
|32.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                            
|        |  |                                                                                                                                                                                                                                                  
|99.1    |  | Risk Factors                                                                                                                                                                                                                                     

E-2